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Smurfit Stone files for reorganization in U.S. and Canada PDF Print E-mail
Written by Tom Philp   
TORONTO - Smurfit Stone Container Corp. announced this morning (26 January 2009) that it had filed for reorganization in the U.S. and would do so in Canada sometime this week.

 

The U.S.-based maker of materials for cardboard boxes said it submitted a filing under Chapter 11 in a Delaware court, adding that a similar filing would be made under Canada's Companies' Creditors Arrangement Act (CCAA). Smurfit said those filings will help it restructure debt as demand for packaging material wanes in the face of a global recession.

The company said it had arranged US$750 million in debtor financing to allow it to maintain its day-to-day operations in both countries. Smurfit said the arrangement is still subject to court approval.

"The acceleration of the unprecedented global economic recession has weakened demand for packaging, and the frozen credit markets have prevented an out-of-court refinancing of our capital structure," Smurfit chief executive Patrick Moore said in a statement.

"While this is not the outcome we anticipated, we are taking this action to become a more financially healthy company," he added.

Smurfit operates 18 facilities in Canada, including two mills and two other plants in Montreal that employ more than 900 people. In total, Smurfit has more than 2,500 Canadian employees.

However, more than 340 Smurfit workers in Quebec and Ontario lost their jobs late last year as the company shuttered two operations to avoid cash losses amid rapidly deteriorating conditions.

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