Majority of Norske Skog Unsecured Creditors Reject September 18 Proposal in Favor of a Consensual, Value-Enhancing Restructuring


A diverse coalition (the “Unsecured Committee”) of Norwegian and foreign beneficial holders of more than 50% of the senior unsecured notes issued by Norske Skogindustrier ASA and its subsidiaries (together, the “Norske Group”) has been working cooperatively for the past several months to reach a consensual, value-enhancing restructuring of the Norske Group. It is pleased to announce that it has reached consensus on a restructuring as set forth in Exhibit 1 (the “Unsecured Proposal”). In the committee’s view, the Unsecured Proposal will enhance the value of the Norske Group while delivering a meaningfully better recovery to junior stakeholders than the recapitalization proposal launched by the Norske Group on September 18 (the “September 18 Proposal”).

As background, the Unsecured Committee has repeatedly shared its views, and willingness to be constructive, with management of the Norske Group and certain stakeholders, including the ad hoc committee of senior secured noteholders (the “SSN AHC”) and lenders under the Norwegian Securitization Facility (together with the SSN AHC, the “SSCG”). While the Unsecured Committee would like to continue to be constructive, it is dismayed by the current status of the restructuring process, including the September 18 Proposal.

In no uncertain terms, the Unsecured Committee rejects the September 18 Proposal and calls for the Norske Group to immediately

  • withdraw the September 18 Proposal, which lacks requisite support;
  • cease facilitating a collateral enforcement (the “Enforcement”) that (i) will, in the Unsecured Committee’s view, unjustly enrich the SSCG while leaving no recovery to other stakeholders and (ii) pre-supposes that an Enforcement in which the SSN AHC takes ownership of the Norske Group is feasible without the consent of the Priority Exchange Notes (a false and dangerous assumption that could lead to significant value destruction for all stakeholders, suppliers, customers and employees); and
  • work with the Unsecured Committee to consummate the Unsecured Proposal, which will enhance the value of the Norske Group while delivering a meaningfully better recovery to junior stakeholders than the September 18 Proposal.

The Unsecured Committee believes that the Unsecured Proposal is meaningfully superior to the September 18 Proposal. Notably, as set forth in Exhibit 1c, the proposal delivers more value to all junior stakeholders than the September 18 Proposal while still preserving substantial value for the SSCG. Moreover, unlike the September 18 Proposal, the Unsecured Proposal ensures that in the base case scenario under Norske Group’s proposal launched on June 2 (the “June 2 Proposal”), which valued the Norske Group at an enterprise value of €640 million, the SSCG does not recover substantially above par. Additionally, relative to the September 18 Proposal, the Unsecured Proposal allows for 25% more new equity to be invested in the Norske Group so as to further deleverage the business and better position it for growth to the benefit of all stakeholders.

Given the substantial benefits of the Unsecured Proposal, the Unsecured Committee is hopeful that the Norske Group and the SSCG will engage in good faith negotiations to consummate the Unsecured Proposal. If, however, this cannot be achieved despite the Unsecured Committee’s best efforts to bring the parties together, the Unsecured Committee may have little choice but to litigate to protect its rights and those of similarly situated stakeholders.

The Unsecured Proposal is non-binding on the Unsecured Committee, and the terms, conditions, form and structure of implementation of any proposals, plans or agreements will be subject to various customary conditions, including completion of due diligence, all internal and credit committee approvals, negotiation and agreement of acceptable documentation, structuring and implementation of the plans, adoption of regulatory changes and judicial confirmation of restructuring plans in all applicable jurisdictions. The Unsecured Committee does not have or assume any fiduciary or other duties to any party. Nothing in this press release shall create any binding legal obligations for any member of the Unsecured Committee, and it is understood that all such members continue to reserve all rights in connection with any present or future legal proceedings to which they may be parties. This press release is not intended as a solicitation for a vote on any plans or the offer or sale of any security.

Moelis & Company

Matthew Prest
Telephone: +44 (0) 207 634 3567

Emily Tunney
Telephone: +44 (0) 207 634 3584

¹ All shareholder warrants and PEN/SUN warrants for 8% of the post-new money equity are to be stapled to the new money. They are thus to be allocated per the new money waterfall set forth in the “New money offering” row.

² Equity allocations are to be fixed as to (i) NSF/SSNs, (ii) PEN/SUNs, (iii) Perpetual Notes and (iv) shareholders. However, the breakdown between the NSF and SSNs and the PENs and SUNs will change based on accrued interest. The numbers shown here reflect accrued interest as of June 30, 2017.

ᶟ All post-new money splits and recoveries assume that the new money opportunity is fully subscribed by the first class in the applicable new money waterfall.

⁴ Pre-new money and post-new money recoveries are based on (i) an assumed enterprise value of €450 million, (ii) net debt of €261 million (prior to new money) and (iii) exchange rates of 9.5713 EUR/NOK and 8.3870 USD/NOK pursuant to the Norske Group’s assumptions in the September 18 Proposal. All recoveries are calculated as (i) recovery on initial claim (or shares, in the case of shareholders) plus profit from new money divided by (ii) claim (or market value, in the case of shareholders). Creditor recoveries are calculated based on claims as of June 30, 2017. Shareholder recoveries are calculated based on market value as of September 18, 2017 at an exchange rate of 9.5713 EUR/NOK.

⁵ The enterprise value of €640 million reflects the Norske Group’s assumed enterprise value in its June 2 Proposal.


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