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NewPage files for Chapter 11 protection

Miami Twp. firm cites decline in demand for magazine-grade paper.

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By Thomas Gnau, Staff Writer Updated 10:06 PM Wednesday, September 7, 2011

Miami Twp.-based paper producer NewPage Corp. said Wednesday it and its corporate parent and subsidiaries are seeking Chapter 11 protection in a U.S. bankruptcy court in Delaware.

NewPage, which has around 350 local employees, said Wednesday it will work with its creditors to build a Chapter 11 plan “that details how it intends to satisfy its liabilities and restructure its balance sheet to emerge as a financially stronger company.”

“We strongly believe that the court-supervised restructuring we began (Wednesday) is the most effective means of strengthening our financial position and enhancing our standing as the leading producer of printing and specialty paper in North America,” NewPage President and CEO George Martin said in the company’s statement.

NewPage said it has obtained up to $600 million in debtor-in-possession financing.

The company also said it has filed customary motions with the bankruptcy court to allow it to continue paying wages and offering benefits to U.S. employees, honor obligations for customers and “provide additional protection to various other stakeholders.”

The company has been troubled in recent years. Last year, the company had three chief executives serve in less than nine months.

For all of 2010, NewPage reported a net loss of $656 million, more than double the loss of $308 million for full-year 2009, the company has said. For the second quarter of 2011, the company reported a net loss of $132 million compared to a net loss of $174 million in the second quarter of 2010.

In a filing with the Securities and Exchange Commission earlier this year, the company acknowledged “substantial” indebtedness. As of the end of 2010, NewPage had more than $3.2 billion of debt.

In April, news service Bloomberg, citing anonymous sources, reported that NewPage owner Cerberus Capital Management LP was working with three firms on restructuring its debt. That report came only days after NewPage said its chief financial officer, David Prystash, had resigned. A NewPage spokeswoman at the time dismissed the report as “rumors.”

In 2005, Cerberus Capital Partners bought NewPage from MeadWestvaco for $2.3 billion.

In September 2007, NewPage purchased the North American assets of Finnish papermaker Stora Enso Oyj, doubling NewPage’s size.

In late 2009, the company said it would join other firms in filing antidumping and countervailing duty petitions against some paper imports from China and Indonesia. In 2007, the U.S. Department of Commerce had ruled that NewPage had been harmed by cheap imports, but the International Trade Commission had disagreed. “We’re still right, and we’re harmed (by cheap imports),” Richard Willett Jr., the company’s then-chief executive, told the Dayton Daily News in late 2009.

NewPage’s leased headquarters is at 8549 Gander Creek Drive.

Contact this reporter at (937) 225-2390 or tgnau@DaytonDailyNews.com.

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