UPDATE 2-Tembec asks US to recognize recapitalization
(Adds company comment on recapitalization)
NEW YORK, Sept 4 (Reuters) - A unit of Canadian forestry firm Tembec Inc (TMB.TO) filed for Chapter 15 bankruptcy protection in New York on Thursday as a procedural step to implement a debt restructuring already approved in Canada.
Chapter 15 covers cross-border insolvencies and allows U.S. courts to recognize a foreign proceeding.
"It is not in any way a material event and does not in any way affect the business or the financial condition or anything else related to the newly recapitalized corporation," Tembec Inc chief executive James Lopez said in a statement.
The filing was meant to close a "procedural loose end," the company said.
The Quebec-headquartered company completed a recapitalization at the end of February under which it converted about US$1.2 billion in debt into equity, leaving its former shareholders with about a 5 percent stake.
Like other Canadian lumber producers, the company has struggled with the combination of weak lumber markets in North America and strengthening of the Canadian dollar.
Tembec said it is already benefiting from the recapitalization, which will reduced its annual interest costs by C$67 million.
The company's EBITDA, earnings before unusual items, interest, income taxes, depreciation, amortization and non-operating expenses improved to C$9 million in the third quarter from a negative C$16 million in the first quarter.
"Things are going well," spokesman Richard Fahey said.
"The chapter 15 filing is intended to give effect to the sanction order issued under the Canada Business Corporation Act in Canada on February 27, 2008 and does not affect the rights of any creditors or shareholders or any security holder of Tembec Inc.," the company said in a statement. (Reporting by Jonathan Stempel, Emily Chasan and Allan Dowd; Editing by Gary Hill)
