BRENTWOOD, Tenn., April 1, 2019 /PRNewswire/ -- Orchids Paper
Products Company (NYSE American: TIS) (the "Company"), a leading
manufacturer and national supplier of high quality consumer tissue
products, including paper towels, bathroom tissue and paper
napkins, today announced it has entered into an option agreement
(the "Option") with Orchids Investment LLC ("OI"). The Option gives
the Company the right to execute an asset purchase agreement with
OI (the "Purchase Agreement"), through which, should the Company
exercise the Option, OI would acquire substantially all of the
Company's assets in exchange for a credit bid of approximately
$175,000,000 against the Company's
obligations under its pre-petition secured credit facility plus
other consideration. OI is indirectly owned by a fund affiliated
with Black Diamond Capital Management, L.L.C. and Brant Paper
Investment Company LLC. To facilitate the potential sale and
address its debt obligations, the Company has initiated proceedings
under chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy
Court for the District of Delaware
("Court"). The Company has filed a bid procedures and sale motion
with the Court, and the Purchase Agreement will be subject to an
auction at which higher and better offers may be made and will
require Court approval. The bid by OI comprises the initial
stalking horse bid in the auction process. Subject to the results
at auction, the closing of the transaction is subject to the
satisfaction of usual and customary conditions, but the Company
anticipates the transaction will move swiftly and aims to complete
the process no later than August
2019.
"The Company began experiencing financial difficulty in late
2016 due to a number of factors, including unprecedented increases
in input costs, most notably fiber and freight, which the industry
has not yet been able to fully recover with price increases to
customers; new competitive industry capacity driving down selling
prices to defend and grow business; and construction cost overruns
and start-up inefficiencies at its new production facility in
Barnwell, South Carolina," said
Jeffrey Schoen, the President and
Chief Executive Officer of the Company. "Ultimately it was
determined that using the chapter 11 process to facilitate a
potential sale was the swiftest and most efficient way to preserve
stakeholder value and sustain business operations."
OI also serves as the Company's pre-petition secured lender, and
has agreed to provide debtor-in-possession ("DIP") financing to
support the Company's day-to-day operations during the pendency of
the bankruptcy case. Current management will continue to lead the
Company during the pendency of the sale process, with operations
supported by the DIP financing. The Company intends to operate its
business as usual while it works to complete the potential sale
through the chapter 11 process. The Company also has filed
customary motions with the Court seeking authorization to continue
employee wages and benefit programs, permit payments on prepetition
claims of our critical suppliers and other vendors, and maintain
customer programs in the normal course in addition to certain other
relief.
"Our commitment to providing high quality consumer tissue
products is unwavering and we have found a new partner who can help
us strengthen our business under a new capital structure, leverage
new resources and opportunities, and build on our strong
foundation, so that our business can continue to provide value to
the marketplace. The new customer we announced last year began
shipping ultra-premium products from Barnwell in late March," said Mr. Schoen.
The Company is headquartered in Brentwood, Tennessee with manufacturing
locations in Pryor, Oklahoma and
Barnwell, South Carolina.
Court filings as well as other information related to the
restructuring are available at
https://cases.primeclerk.com/OrchidsPaper/ or by calling the
restructuring information center toll free at 1-844-205-7430, or
international toll at 347-576-1552, or submit an inquiry via e-mail
to orchidspaperinfo@primeclerk.com.
The Company is advised by the law firm of Polsinelli PC;
Deloitte Transactions and Business Analytics LLP is the Company's
interim chief strategy officer; and Houlihan Lokey Capital, Inc. is
the Company's financial advisor and investment banker.
Forward-Looking Statements
This press release contains forward-looking
statements covered by the safe harbor
provisions contained in the Private Securities Litigation
Reform Act of 1995. These statements relate to future events and
involve known and unknown risks, uncertainties and other factors
that may cause the Company's actual results, levels of activity,
performance or achievements to be materially different from any
future results, levels of activity, performance or achievements
expressed or implied by such forward-looking statements. In some
cases, forward-looking statements can be identified by
terminology such as "may," "should," "could," "expects," "plans,"
"intends," "anticipates," "believes," "estimates," "predicts,"
"potential," "will" or "continue" or the negative of such terms or
other comparable terminology. Such statements speak only as of the
date hereof and are subject to change. The Company undertakes no
obligation to revise or update publicly any forward-looking
statements for any reason. These statements are not guarantees of
future performance and are subject to certain risks, uncertainties,
and assumptions that are difficult to predict. Forward-looking
statements discuss, among other matters: risks and uncertainties
associated with Chapter 11 proceedings; the negative impacts on our
businesses as a result of filing for and operating under Chapter 11
protection; the adequacy of the capital resources of our businesses
and the difficulty in forecasting the liquidity requirements of the
operations of our businesses; the unpredictability of our financial
results while in Chapter 11 proceedings; our ability to discharge
claims in Chapter 11 proceedings; negotiations with the holders of
our indebtedness and our trade creditors; risks and uncertainties
with performing under the terms of our DIP financing and any other
arrangement with lenders or creditors while in Chapter 11
proceedings; the forecasted uses of funds in the
Company's DIP budgets; our ability to conduct business as
usual during the pendency of bankruptcy proceedings; our ability to
continue to serve customers, suppliers and other business partners
at the high level of service and performance they have come to
expect from us; our ability to continue to pay suppliers and
vendors; the risk that our Chapter 11 Cases may be converted
to cases under Chapter 7 of the Bankruptcy Code; the Company's
ability to secure operating capital; and any statements or
assumptions underlying any of the foregoing.
Important factors that may cause results to differ from
projections include, but are not limited to, the decisions of the
Court; negotiations with our debtholders, our creditors and
any committee approved by the Court; negotiations with
lenders on the definitive DIP financing documents; the Company's
ability to meet the closing conditions of its DIP financing; the
Company's ability to meet the requirements, and compliance with the
terms, including restrictive covenants, of their respective DIP
financing arrangements and any other financial arrangement while in
Chapter 11 proceedings; changes in our operational or cash needs
from the assumptions underlying our DIP budgets and forecasts;
changes in our cash needs as compared to our historical operations
or our planned reductions in operating expense; adverse litigation;
our ability to control operating costs and other expenses; and
those detailed under the sections entitled "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our Forms 10-Q filed with the Securities
and Exchange Commission (the "SEC") on November 14, 2018 and August 9, 2018 and Form 10-K filed with the SEC
on March 16, 2018.
About Orchids Paper Products Company
Orchids Paper
Products Company is a leading national supplier of high quality
consumer tissue products primarily serving the at home private
label consumer market. The Company produces a full line of tissue
products, including paper towels, bathroom tissue and paper
napkins, to primarily to retail chains throughout the United States.
For more information, visit orchidspaper.com.
Media Contact:
Louie Toma
774-291-6000
louie.toma@watersedgeir.com
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SOURCE Orchids Paper Products Company