LONDON (From news reports) -- Norske Skog's new board is to publish a fresh set of proposals to recapitalise the ailing paper producer this coming Monday, September 18. The company said it would then give the creditors until close of business on Monday October 2 to respond to the plan.
Last week, the Norwegian company reopened talks with creditors, which had been shelved at the end of August after representatives of new local equity investors joined the group's board. Holders of its €290m senior secured notes had agreed to provide a €16m short-term loan to tide it over.
Any fresh proposals are likely to be more severe than those put out by the company and its creditors in June and July. Norske Skog has warned that gross operating earnings of NKr700m (US$900m) are lower than expected when those earlier proposals were published.
"The recapitalisation proposal will reduce the group's debt position and interest payments to a level which leaves Norske Skog as an industrial company with a realistic and long-term sustainable capital structure to enable future development of the group in a rather challenging international business environment," said the company in a statement.
Norske Skog said its energy costs were linked to long-term power contracts until 2026, which were proving more expensive than previously envisaged.
"The calculation of these values is highly sensitive to changes in forward prices and currency rates, likewise, there is material uncertainty on these two factors as some of the power supply contract arrangements are in place until 2026," it said.
Norske Skog has skipped coupons on some of its outstanding bonds but has been relying on grace periods to avoid a default.
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