Caraustar files for reorganization

Caraustar Industries, Inc. has reached agreement with holders of approximately 83 percent of its 7 3/8 percent senior notes that matured June 1, 2009 and 91 percent of its 7 1/4 percent senior notes maturing May 1, 2010 on the terms of a cooperative financial restructuring that would reduce debt obligations by approximately $135 million. The company and the consenting noteholders have entered into an agreement to complete the restructuring through a pre-negotiated plan of reorganization.

Under the plan, holders of outstanding shares of Caraustar’s common stock will receive their pro rata share of $2.9 million, or approximately $0.10 per share, subject to certain conditions contained in the plan. In addition, the plan contemplates the exchange of the company’s existing 7 3/8 percent and 7 1/4 percent senior notes for an aggregate of $85 million in new senior secured notes and 100 percent of the common stock of the reorganized company. The reorganized company is expected to emerge as a private entity with Wayzata Investment Partners LLC becoming the company’s controlling shareholder.

A key feature of the plan is that all entities involved will receive all amounts owed to them. The company is seeking authority from the Court to pay these amounts in the ordinary course of business.