(Reuters) - SP Newsprint Co, owned by newsprint magnate and fine art collector Peter Brant [ID:nPNNY32510], filed for bankruptcy protection because of rising raw material costs and too much debt, and said it may sell itself to its lenders.
Tuesday’s filing by the Greenwich, Connecticut-based company, which has called itself the fourth-largest North American newsprint manufacturer, followed a September 7 bankruptcy filing by NewPage Corp, North America’s largest maker of magazine paper. New Page is owed by private equity firm Cerberus Capital Management LP.
Paper makers have struggled in recent years with rising costs, increased competition from Asia and Europe, and falling demand as more advertisers and readers move online.
Ed Sherrick, SP Newsprint’s chief financial officer, in a statement said weak economic conditions and record prices for key raw materials shrank profit margins, leaving the company unable to continue paying its debts.
In a court filing, SP Newsprint said it is in talks to obtain financing to help it operate in bankruptcy.
It said it anticipates that its lenders, including General Electric Co’s GE Capital unit, will require a sale of the company as a going concern, and that these lenders have “expressed a willingness” to serve as the initial bidder.
A lawyer for SP Newsprint did not respond to a request for comment.
The company has between $100 million and $500 million of both assets and liabilities, according to its petition filed with the U.S. bankruptcy court in Wilmington, Delaware. Three affiliates also sought court protection from creditors.
SP Newsprint said it operates mills in Dublin, Georgia and Newberg, Oregon with an annual capacity of 910,000 metric tons, and 23 recycling facilities through its SP Recycling unit.
Another Brant company, newsprint manufacturer White Birch Paper Co, filed for bankruptcy protection in Canada in February 2010. That company’s U.S. unit Bear Island Paper Co filed for Chapter 11 protection the same month in Richmond, Virginia, and remains in bankruptcy proceedings, court records show.
Brant was once a billionaire, though he no longer appears on Forbes magazine’s annual list of the richest Americans. His second wife is supermodel Stephanie Seymour.
He has also run Brant Publications Inc, whose magazines include Art in America, The Magazine Antiques and Interview, which was created by the artist Andy Warhol.
Brant was also the breeder of the horse Thunder Gulch, which won the 1995 Kentucky Derby.
SP Newsprint said it plans to retain Cahill Gordon & Reindel and Richards, Layton & Finger as its law firms.
The case is In re: SP Newsprint Holdings LLC, U.S. Bankruptcy Court, District of Delaware, No. 11-13649.
Reporting by Jonathan Stempel in New York; Editing by Derek Caney, Matthew Lewis and Bernard Orr