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Smurfit Stone details exit financing, outlook
WILMINGTON, Delaware |
WILMINGTON, Delaware (Reuters) - Packaging company Smurfit Stone Container Corp SSCCQ.PK plans to raise $1.85 billion of debt financing to pay off creditors and support its business when it exits bankruptcy, according to a regulatory filing on Friday.
The company plans to borrow $1.2 billion under a six-year loan and have $650 million available under an asset-backed revolving loan, according to a presentation to investors filed with regulators.
Smurfit, one of the world's largest recyclers of paper and a leading paper packaging manufacturer, expects to exit bankruptcy in April. The company filed a year ago after a sharp rise in raw material costs coincided with a drop in demand and tight credit markets.
Smurfit anticipates emerging with $1.1 billion of net debt, down $2.9 billion from when it entered bankruptcy, and plans to cut 599 jobs in 2010, to bring its staff to about 19,000. The company reduced its payroll by 2,185 last year.
Smurfit Stone said it gained market share in 2009, despite operating under court protection from creditors.
The company anticipates reducing it debt ratio to 2.5 times its EBITDA, or earnings before interest, taxes, depreciation and amortization. The debt ratio was 8 times in 2009.
It also forecasts an increase in EBITDA of more than 40 percent by 2014, which would reduce its EBITDA ratio to 1.7 times by 2014.
The presentation said the company expects to benefit from a recovery in demand and lower production costs after the closing of less efficient plants.
The company expects to get court approval to begin asking creditors to vote on its plan of reorganization later this month.
Sources have told Reuters that shareholders have begun exploring the possibility of fighting Smurfit's plan of reorganization, which proposes wiping them out. They may argue the company's forecasts suggest it is worth enough to provide shareholders with some recovery.
Shares of Smurfit were down 11.5 percent at 30 cents per share in pink sheet trading.
The case is In re Smurfit Stone Container Corp, U.S. Bankruptcy Court, District of Delaware, No. 09-10235.
(Editing by Steve Orlofsky)
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