Fraser Papers Inc.

Fraser Papers Inc.

January 10, 2011 17:06 ET

Creditors Decline to Support Fraser Papers Restructuring Plan

TORONTO, ONTARIO--(Marketwire - Jan. 10, 2011) -

(All financial references are in U.S. dollars unless otherwise noted)

Fraser Papers Inc. and its subsidiaries ("Fraser Papers" or the "Company") announced today that a meeting of creditors (the "Meeting") was held in Toronto. The Meeting was to vote on the consolidated plan of compromise or arrangement (the "Plan") filed with the Ontario Court overseeing its restructuring proceedings under the Companies' Creditors Arrangement Act ("CCAA").

Despite the support of PricewaterhouseCoopers, the court-appointed Monitor, the Company did not receive the sufficient support from creditors at the Meeting. As a result, the Company will not be implementing the Plan. 

Under criteria set out in the CCAA, the Plan required approval of the majority of creditors in number and 66 2/3% by dollar value of claims filed by creditors. The Company reported that 98.4% of creditors voted in favour of the Plan. However only 41.7% of claims based on dollar value supported the Plan, which is below the required level for Plan Approval.

During the meeting, the Monitor indicated that implementation of the Plan was expected to result in estimated recoveries of approximately 19%-20%, on an undiscounted basis.

"We worked with our stakeholders in an effort to solicit support for the Plan, which provides better value to creditors than any of the alternatives available to the Company," said Glen McMillan, Chief Restructuring Officer of the Company. "Unfortunately, there are a small number of large creditors who have decided to vote against the Plan to the detriment of the majority of creditors who would have preferred to see this Plan move forward". 

Subject to the availability of funding, the Company will continue to realize upon its remaining assets for the benefit of all stakeholders and will consider all options in connection with its current CCAA proceedings or any other proceedings.

For more information about the Company, visit www.fraserpapers.com.

Note: This press release contains forward-looking information and forward-looking statements within the meaning of Canadian provincial securities laws. These forward-looking statements include, among others, statements with respect to: the filing of court materials and the occurrence of court proceedings, the proposed Transaction and proceeds received therefrom, the Plan filed by the Company; the resolution of claims filed against the Company; and communication with creditors. The words "will", "expect", "forward", "continue", variations of those words and other words and expressions which may be predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements. Factors that could cause the court proceedings and filing of materials, the resolution of claims, communications with creditors and continuing restructuring efforts to differ materially from those set forth in the forward-looking statements include: unforeseen administrative, legal, transactional, technological, operational or production issues; inability to meet certain conditions and/or to reach agreement with creditors in general, unforeseen economic occurrences prices, availability of financing, actions of creditors, demand for the Company's products; cost of fibre, energy and chemicals; sales and marketing performance; and, other risks detailed from time to time in the documents filed by the Company with the securities regulators in Canada. In addition, the Company and its subsidiaries are currently operating under creditor protection laws in Canada and the United States. Many of the Company's plans are subject to the review of commercial courts in Canada and the United States. The Company cannot anticipate when such plans will be the subject of consideration by the commercial courts or, if they are, what impact that consideration will have on the plans or intentions of the Company. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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