Fraser Papers to sell operations to Brookfield under new CCAA plan

By Caroline Salls

Pittsburgh, Jan. 28 - Fraser Papers Inc. filed an amended consolidated Companies' Creditors Arrangement Act plan of compromise and arrangement with the Ontario Court overseeing its restructuring proceedings, according to a company news release.

Fraser said the amended plan will also be filed with the U.S. Bankruptcy Court for the District of Delaware in connection with its Chapter 15 bankruptcy case.

The company said it will ask the court to schedule a meeting for Feb. 8 to allow its creditors to vote on the amended plan.

If the plan is approved by creditors, Fraser plans to seek Canadian court approval on Feb. 10 and bankruptcy court approval on Feb. 11 to implement the plan.

According to the release, the creditors rejected a proposed plan of arrangement on Jan. 10, despite 98.4% of all creditors voting to support that plan.

Fraser said the new plan includes a commitment from Brookfield Asset Management Inc. to serve as sponsor.

As sponsor, Brookfield will purchase the company's remaining operating assets, consisting of two lumber mills in Northern Maine, through the acquisition of Fraser Papers' U.S. subsidiaries for $12.4 million in cash.

Under the amended plan:

• All secured claims will be repaid;

• Substantially all active employees of the remaining operations will still be employed;

• All proceeds from the sale of the company's assets will be distributed to trusts to satisfy all outstanding unsecured claims.

Subject to completion of the sale and sufficient cash availability, the new plan calls for a cash distribution to unsecured creditors equal to the lesser of the amount of their claim and $500,000; and

• Fraser's U.S. companies will continue to be responsible for specified liabilities.

The proceeds to be distributed through the trust include a 49% interest in the common equity of Twin Rivers Papers Company Inc., which is the company that purchased Fraser's specialty papers business; $44 million in promissory notes issued by Twin Rivers; and any cash available after secured creditors and CCAA costs are paid in full.

Fraser Papers, a Toronto-based paper company, filed for bankruptcy on June 18, 2009 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 15 case number is 09-12123.

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