Disgruntled shareholders of newsprint giant Norske Skog have called an extraordinary general meeting as the company struggles to restructure a massive debt that has hit €1 billion and threatens the company's operations in Australia and New Zealand.
The Norwegian papermaker last month asked holders of senior note loans to switch to new unsecured loans that mature at later dates in a bid to strengthen its capital structure. Carsten Dybevig, vice president Communication and Corporate Affairs, said Norske Skog had "encountered an exceedingly more challenging operating environment in 2015 than envisaged at the beginning of the year.
European newsprint prices declined by close to 15% during the second quarter following a fight for market share. In Asia, newsprint prices are historically low, creating a significant challenge for the Australasian business, as lower domestic demand cannot be exported at meaningful margins. The outlook for 2016 is for an improved pricing environment; however, the lost contribution in 2015 is unlikely to be compensated in the first half of 2016.
However, GSO Capital Partners, controlled by multinational private equity firm Blackstone Group LP, has announced it will seek to replace three Norske Skog directors as it steps up its fight over the debt restructuring plans. GSO last week became Norske Skog’s largest shareholder, with an 11 percent stake, and is the largest holder of Norske Skog’s 218 million euros of unsecured bonds that are due June 2017.
GSO and Cyrus Capital Partners have called for an extraordinary general meeting by January 7 to vote on new board members and a new refinancing proposal. They're seeking to replace Karin Bing Orgland, Siri Beate Hatlen and Ole Enger as directors, according to a company statement:
GSO and Cyrus have requested that an extraordinary general meeting be held in Norske Skogindustrier ASA, at which the following agenda items are included:
- Election of new members of the Board of Directors to replace the Board members Ms Karin Bing Orgland, Ms Siri Beate Hatlen and Mr Ole Enger.
- Election of new members of the Election and Remuneration Committee to replace certain of the current members.
- GSO and Cyrus' contemplated refinancing proposal for Norske Skogindustrier ASA.
Furthermore, GSO and Cyrus have notified that they will revert with their proposal for new members to the Board of Directors and new and departing members of the Election and Remuneration Committee, as well as a presentation of their refinancing proposal. Such extraordinary general meeting shall be held within one month. The Board of Directors will therefore call for an extraordinary general meeting to be held within 7 January 2016.
The board includes five shareholder-elected directors and three voted for by employees - all with equal voting rights.
Norske Skog has two mills in Australia – at Boyer in Tasmania and at Albury in NSW – and operates the Tasman mill at Kawerau in New Zealand.