Caraustar Industries, Inc.
CDG Role: Company’s Financial Advisor for Comprehensive Restructuring
Background
- Caraustar Industries, Inc. is one of North America’s largest integrated manufacturers of 100% recycled paperboard and converted paperboard products.
- The Company was forced to file for Chapter 11 protection in June 2009 due to:
- The June 1, 2009 maturity of $200 million of Bonds and May 2010 maturity of an additional $30 million of Bonds.
- The strain on the global credit markets and resulting unavailability of supportable refinancing opportunities
- Caraustar had debt outstanding in excess of $220 million at the time of filing
- CDG was retained as financial advisor to the Company
Issues
- The Company had to expeditiously identify and evaluate numerous sales and refinancing opportunities to fulfill the impending debt maturities.
- Caraustar management needed to quickly define and create a core business plan for discussions with the Noteholders.
- Negotiations with the Noteholders was essential in order to preserve some value for shareholders.
- DIP financing was needed to support customer and vendor confidence.
Value to Client
- Created a comprehensive long-term Business Plan, which was used as the basis for all negotiations.
- Led all the negotiations with the Noteholders to reach a consensual Plan of Reorganization prior to filing for Ch. 11.
- Assisted the Company with the cash management forecasting process to ensure borrowing capacity under the DIP financing facility and stabilized operations
- CDG facilitated a Pre-Negotiated Plan of Reorganization with exit financing, debt conversion and a cash payment to the existing equity:
- Completed reorganization in less than 90 days
- Bonds with roughly $220 million of exposure were converted into 100% of the new equity
- Full recoveries to unsecured creditors
- The existing equity received a cash payment of $2.9 million.