Port Townsend Paper Corporation files amended plan of reorganization under Chapter 11 of the Bankruptcy Code

Jun 22, 2007. /Lesprom Network/. Port Townsend Paper Corporation and its affiliates announced on June 21, 2007 the filing of the amended plan of reorganization under Chapter 11 of the Bankruptcy Code jointly proposed by the debtors and the informal committee of senior secured noteholders, dated June 20, 2007 and accompanying disclosure statement in United States Bankruptcy Court, Western District of Washington. The company also announced that it has received a commitment letter from certain holders of the company's 11% senior secured notes due 2011 to provide $60 million in exit financing. The company had sought Chapter 11 protection to reorganize on January 29, 2007 and is on track to emerge from Chapter 11 during the third quarter of 2007. The plan preserves the Port Townsend paper mill as an operating business on the northern Olympic Peninsula, and ensures that it will remain a vital economic engine for suppliers, employees, governmental entities, and secondarily-impacted businesses. The company will emerge from bankruptcy with a healthier balance sheet, enhanced liquidity, and adequate financial resources to implement capital improvements. Pursuant to the plan, holders of the company's secured notes will convert approximately $125 million in principal amount of notes secured by substantially all of the company's U.S. and Canadian assets into 100% of the new common stock of the reorganized company. The plan provides for the payment of approximately $4.0 million to creditors with claims for goods delivered to the company within the 20 days preceding the bankruptcy filing, $2.0 million to creditors whose contracts are being assumed, and $760 000 in satisfaction of loggers' and lumbermen's liens. In addition, the plan makes up to $800 000 available for pro rata distribution to general unsecured creditors. The company will seek approval of the disclosure statement and exit financing commitment letter at a Bankruptcy Court hearing scheduled for June 27, 2007. "This filing is a significant step forward in our reorganization efforts and should allow the company to emerge from bankruptcy with a significantly improved balance sheet and liquidity position," said John Begley, the company's chief executive officer. The Port Townsend Paper family of companies employs approximately 800 people and annually produces more than 320 000 tonnes of unbleached kraft pulp, paper and linerboard at its mill in Port Townsend, Washington. The company also manufactures approximately 1.8 billion square feet of corrugated products annually at its three Crown packaging plants and two BoxMaster plants located in British Columbia and Alberta.