Catalyst Paper’s restructuring plan has been voted down by the company’s unsecured creditors, the company announced in a press release on Wednesday afternoon.
“Today’s creditors’ vote makes it clear for stakeholders that our path to emerge from protection will be through a sales process initiated by a stalking horse bid from secured noteholders,” said President and Chief Executive Officer Kevin J. Clarke.
“Our objective remains unchanged and that’s to put our company on better financial footing to enable us to compete vigorously and to adapt as necessary to the continuing changes in the markets for our products.”
Catalyst Paper employs 1,700 people in Port Alberni, Powell River and Crofton, and has been in creditor protection since January.
CEP Local 592 represents workers at Catalyst’s Port Alberni mill. Local592 president Jim VanDusen said he wasn’t in a position to respond just yet.
“I’m coming out of one meeting and heading into anther about this. Right now I have no comment,” VanDusen said.
Catalyst pays industrial taxes to the city and this year owes $4.2 million, payment of which is due on July 3.
It’s too early yet to get a bead on how the development could impact the city. “Catalyst has said that it’s business as usual going forward in the short term,” City Manager Ken Watson said. “We’ll be speaking to them to ask what that means and how we can support them.”
Under the Creditors Arrangement Act, approval of not less than 66 2/3 per cent of the principal amount of each creditor class voting on the plan is required.
Although 99.5 per cent of the principal amount of the secured creditor class voted in favour of the plan, only 64 per cent of the principal amount of the unsecured creditor class voted in favour of the plan at meetings in Richmond, B.C.
The company has the resources to meet its obligations to employees and suppliers, and to ensure that business carries on as usual during the sales process, Clarke said.