* NewPage is largest North American coated paper maker
* Files without immediate restructuring plan
* Largest non-financial U.S. bankruptcy in two years
(Adds names of lenders)
By Tom Hals and Caroline Humer
WILMINGTON, Del./NEW YORK, Sept 7 NewPage Corp
[NEWPG.UL], the biggest maker of magazine paper in North
America, filed for bankruptcy on Wednesday, succumbing to
falling demand as advertisers and readers move online.
Competition from Europe and Asia and rising costs for pulp,
energy and chemicals have also hurt its business.
NewPage, owned by Cerberus Capital Management LP [CBS.UL],
has been trying to restructure $4.2 billion of debt since
earlier this year, but said jittery suppliers have begun
cutting off credit, leaving liquidity "severely constrained,"
according to filings in Delaware's bankruptcy court.
The Miamisburg, Ohio-based company, which owns paper mills
in the United States and Canada, said it obtained a commitment
led by JPMorgan Chase & Co (JPM.N) for up to $600 million of
credit during its bankruptcy. Other pre-bankruptcy lenders
arranging the financing include Barclays Plc (BARC.L) and Wells
Fargo & Co (WFC.N).
That money will help keep the company operating, but
NewPage did not lay out a plan for emerging from bankruptcy as
companies often do when they file. It said it expects to
continue operating its U.S. businesses as usual and is working
closely with creditors and stakeholders to formulate a plan.
In court documents, the company's financial adviser said
the value of NewPage as an ongoing business is higher than it
would be if it was sold off in pieces.
Creditors include Apollo Management LP [APOLO.UL] and
Avenue Capital, which own some of the company's second lien
debt, according to sources familiar with the situation. Apollo
and Avenue are also investors in NewPage competitor Verso Paper
The company, with $3.4 billion in assets, is the biggest
Chapter 11 filing of the year and the largest filing of a
non-financial company since 2009, according to
Bankruptcies by large companies have declined sharply since
the Federal Reserve lowered interest rates to near zero
following the 2008 financial crisis.
OTHER PAPER MAKERS SUFFER
NewPage, which employs 6,000 workers at its U.S. mills,
primarily produces coated paper, which is used in magazines,
catalogs and high-end advertising brochures.
Its bankruptcy filing comes as competitors are also
pressured by the shift to the Internet. The world's largest
maker of paper used in magazines, South Africa's Sappi Ltd(SAPJ.J), has announced plans to close two mills this year.
NewPage operates 16 papermaking machines at mills in
Kentucky, Maine, Maryland, Michigan, Minnesota and Wisconsin.
It also has a Nova Scotia mill that sought protection from
creditors under Canadian law and said it is looking for buyers
for the unit.
The company said last month it would take "downtime" at its
Canadian subsidiary as the operation had been unprofitable for
more than a year.
NewPage had sales of $1.8 billion in the first half of
2011, up slightly from a year earlier, according to securities
filings. It suffered a net loss of $220 million in the first
half, narrower than the year-earlier loss of $349 million.
NewPage grew through a series of deals. It acquired paper
mills from MeadWestvaco Corp MWV.N for $2.3 billion in 2005
and took the top spot in the North American market in 2007 with
a $2.5 billion deal to buy mills from Finland's Store Enso
The company planned for an initial public offering of its
stock in 2008. It withdrew those plans last year.
The case is Newpage Corp, Case No. 11-12804, U.S.
Bankruptcy Court, District of Delaware.
(Reporting by Tom Hals; additional reporting by Caroline
Humer in New York and Tanya Agrawal and Sakthi Prasad in
Bangalore; editing by John Wallace and Andre Grenon)