Letter of Intent for a Potential Acquisition of Catalyst Paper

catalyst paper logoIn a news release on Monday, May 23, 2016 Catalyst Paper Corporation announced its board of directors has received a copy of expression of intent among Kejriwal Group International (KGI) and the four largest shareholders of the Company holding or controlling approximately 79% of its outstanding common shares, including Mudrick Capital Management, L.P., Cyrus Capital Partners, LP, Oaktree Capital Management, LP and Stonehill Capital Management LLC (collectively, the “Principal Securityholders).

The Principal Securityholders have completed Schedule 13D filings with the United States Securities and Exchange Commission, including a copy of the expression of interest.

The expression of interest contemplates a timeline during which KGI and the Principal Securityholders will pursue a transaction the indicative terms of which include that:

  • common shares would be acquired for $6.00 per share, except those held by the Principal Securityholders which would be exchanged for interests in a new junior convertible term loan;
  • existing credit facilities would have their maturities extended, or be refinanced;
  • existing PIK toggle senior secured notes due October 2017 would be exchanged for interests in a new 5-year US$260.5 million term loan;
  • KGI would commit to equity investments on or after closing of (i) C$25 million in the company and (ii) C$35 million in a newly formed guarantor of the new term loans entered into as part of the transaction; and
  • trade and other obligations would remain unaffected.

The board of directors has indicated that it is encouraged by KGI’s proposal which could provide the Company with a significant amount of capital which further enhances and accelerates Catalyst’s planned growth initiatives. The board of directors will be pleased to review and evaluate any proposal which may result from the expression of intent among KGI and the Principal Securityholders. There can be no assurance that any definitive proposal will be made, that any agreement will be executed and on what terms, or that this or any other transaction will be approved or consummated.


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