Business News
Caraustar Receives Court Approval of First Day Motions
Monday 08. June 2009 - - $75 MILLION DIP FINANCING FACILITY APPROVED - COMPANY RECEIVES PERMISSION TO PAY PRE-PETITION GENERAL UNSECURED CLAIMS - COURT APPROVES CONTINUATION OF EMPLOYEE WAGES, SALARIES AND BENEFITS CARAUSTAR RECEIVES DELISTING NOTICE FROM NASDAQ
Caraustar Industries, Inc. (NASDAQ:CSAR) announced that the Bankruptcy Court for the Northern District of Georgia (the “Court’) approved the company’s first day motions to, among other things, pay pre-petition general unsecured claims in the ordinary course of business, in connection with its voluntary restructuring under Chapter 11.
As previously announced, Caraustar reached agreement with holders of approximately 83 percent of its 7-3/8% Senior Notes maturing June 1, 2009 and 91 percent of its 7-1/4% Senior Notes maturing May 1, 2010 on the terms of a cooperative financial restructuring that would reduce the company’s debt obligations by approximately $135 million.
The Court also granted permission for the company to pay pre-petition employee wages and salaries, to make contributions to the 401(k) and other employee benefit plans, and to reimburse employees for their pre-petition business expenses.
“Having received approval of our first-day motions so quickly sets Caraustar on strong footing as we move towards completing our recapitalization,” stated Caraustar’s President and Chief Executive Officer, Michael J. Keough. “This action by the Court will be well received by our employees, customers and suppliers.”
In addition, the court approved use of the company’s existing cash management system and substantially all of its existing bank accounts. The Court also authorized the immediate use of up to $25 million of the $75 million senior secured debtor-in-possession revolving credit facility from General Electric Capital Corporation (the “DIP Facility”) which will allow the company the support required to fund operations, pay employees’ wages and benefits, and purchase goods and services during the restructuring period.
“The approval of our DIP financing and the Court’s permission to pay pre-petition general unsecured claims in the ordinary course of business means that our trade creditors will continue to be paid, and as a result, we expect to assure continuity of supply to our customers.”
The company also announced it received a “Staff Determination” notification from Nasdaq that its equity securities will be delisted from The Nasdaq Stock Market. The decision was based upon Nasdaq’s Marketplace Rules 5100, 5110(b) and IM-5100-1, and was made after reviewing the company’s press release that it had filed for protection under Chapter 11 of the U.S. Bankruptcy Code and other publicly available information. Trading of the company’s common stock on the Nasdaq Stock Market will be suspended at the opening of business on June 11, 2009. Nasdaq will file a Form 25-NSE with the Securities and Exchange Commission, which will remove the securities from listing and registration. The company does not plan to appeal the Staff Determination. These securities will not be immediately eligible to trade on the OTC Bulletin Board or in the “Pink Sheets,” but may become eligible if a market maker makes application to register in and quote the securities in accordance with Securities and Exchange Commission Rule 15c2-11, and such application is cleared.
The company and its domestic subsidiaries filed voluntary Chapter 11 petitions along with a pre-negotiated Plan of Reorganization in the United States Bankruptcy Court for the Northern District of Georgia on May 31, 2009. The cases will be jointly administered and the main case has been assigned case number 09-73830.