FiberMark gets court OK to implement cost reduction program

By Caroline Salls

Pittsburgh, July 20 - FiberMark, Inc. received approval from the U.S. Bankruptcy Court for the District of Vermont to implement its cost reduction program, which is expected to result in $10 million in annual net savings beginning in 2006, according to a company news release.

As previously reported, the cost reduction initiative includes the proposed closure of the company's Hughesville, N.J., operations and one of its two paper machines in Warren Glen, N.J., both of which have served strategic and non-strategic markets through the company's technical specialties product families.

Some products would be transferred to the company's modernized paper machine in Warren Glen, while others would be transferred to the company's Brownville, N.Y., and Brattleboro, Vt., operations.

The closures are expected to be completed by the end of 2005.

The initiative also includes reductions in selling, general and administrative expenses, with an anticipated first-year net savings of $10 million and a non-cash impairment charge of about $17 million.

These steps will result in a loss of about 135 jobs, mostly in New Jersey.

The court also approved lender fees in connection with the company's anticipated exit financing facility, which vice president and chief financial officer John Hanley said is an important step toward the company's emergence from Chapter 11 and will enable it to complete the financing necessary to implement its plan of reorganization and fund its post-emergence operations, the release said.

Additionally, the court said it will expedite the schedule of proceedings for determining whether to unseal the report recently filed by an independent examiner in connection with issues involving FiberMark's official creditors committee.

In conjunction with the new schedule, the court said it will consider setting a hearing date on approval of the company's disclosure statement for Sept. 2, which will allow for a determination of the unsealing issue before voting on the plan begins.

A hearing on confirmation on the plan was tentatively scheduled for Oct. 7. The company said it expects to emerge from bankruptcy shortly after the plan is confirmed.

FiberMark, a Brattleboro, Vt., producer of specialty fiber-based materials, filed for bankruptcy on March 30, 2004 in the U.S. Bankruptcy Court for the District of Vermont. Its Chapter 11 case number is 04-10463.

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