Sign In     |     Sign Up
Largest professional Nonwoven Machinery Manufacturer in China | Ad
Home / News / Orchids Paper enters into option agreement with OI

Orchids Paper enters into option agreement with OI

08
Apr '19
Pic: Orchid Paper Products
Pic: Orchid Paper Products
Orchids Paper Products, a manufacturer and supplier of high quality consumer tissue products, paper towels, paper napkins, etc, has entered into an option agreement with Orchids Investment LLC (OI). The option gives Orchids right to execute an asset purchase agreement with OI, if exercised grants OI permission to acquire all of Orchid Paper Products’s assets.

The exchange will happen for a credit bid of approximately $175,000,000 against Orchid Paper Products’s obligations under its pre-petition secured credit facility plus other consideration, according to a media statement by Orchid Paper Products.

OI is indirectly owned by a fund affiliated with Black Diamond Capital Management, LLC and Brant Paper Investment Company LLC. To facilitate the potential sale and address its debt obligations, the company has initiated proceedings under chapter 11 of the US Bankruptcy Code in the US Bankruptcy Court for the district of Delaware. The company has filed bid procedures and sale motion with the court and the purchase agreement will be subject to an auction at which higher and better offers may be made and will require court approval. The bid by OI comprises the initial stalking horse bid in the auction process. Subject to the results at auction, the closing of the transaction is subject to the satisfaction of usual and customary conditions, but Orchid Paper Products anticipates the transaction will move swiftly and aims to complete the process no later than August 2019.

“The company began experiencing financial difficulty in late 2016 due to a number of factors, including unprecedented increases in input costs, most notably fibre and freight, which the industry has not yet been able to fully recover with price increases to customers, new competitive industry capacity driving down selling prices to defend and grow business, and construction cost overruns and start-up inefficiencies at its new production facility in Barnwell, South Carolina,” said Jeffrey Schoen, the president and chief executive officer of Orchids Paper Products. “Ultimately it was determined that using the chapter 11 process to facilitate a potential sale was the swiftest and most efficient way to preserve stakeholder value and sustain business operations.”

OI also serves as the company’s pre-petition secured lender, and has agreed to provide debtor-in-possession (DIP) financing to support the company’s day-to-day operations during the pendency of the bankruptcy case. Current management will continue to lead the company during the pendency of the sale process, with operations supported by the DIP financing. The company intends to operate its business as usual while it works to complete the potential sale through the chapter 11 process. The company also has filed customary motions with the court seeking authorisation to continue employee wages and benefit programmes, permit payments on prepetition claims of our critical suppliers and other vendors, and maintain customer programmes in the normal course in addition to certain other relief.

“Our commitment to providing high quality consumer tissue products is unwavering and we have found a new partner who can help us strengthen our business under a new capital structure, leverage new resources and opportunities, and build on our strong foundation, so that our business can continue to provide value to the marketplace. The new customer we announced last year began shipping ultra-premium products from Barnwell in late March,” said Schoen.

Orchids Paper Products is headquartered in Brentwood, Tennessee with manufacturing locations in Pryor, Oklahoma and Barnwell, South Carolina. (PC)

Fibre2Fashion News Desk – India

Leave your Comments

Pic: Borealis
Borealis new PP compounding plant in NC starts up
Pic: Covestro
Covestro to present Insqin technology at Techtextil

Follow us