Date: January 22, 2008
Source: Highland Capital Management, LP
US Bankruptcy Court in New Jersey Approves Sale of Marcal
Funds Managed By Highland Capital Management, LP To Become Majority Owner of Company Upon Closing
Under a sale approved by Judge Morris Stern of the U.S. Bankruptcy Court for the District of New Jersey in Newark, funds managed by Highland Capital Management, LP have been approved to become the new majority owner of the assets of Marcal Paper Mills, Inc., Highland announced today. Highland managed funds participating in a second lien facility, which comprise the majority lenders relating to the pending transaction, have agreed to convert a portion of their outstanding debt into an equity investment as part of the restructuring.
The sale of Marcal Paper Mills' assets to the second lien lenders is pending closing requirements. Marcal had filed for Chapter 11 bankruptcy protection in November 2006. Other elements of the proposed transaction include:
Aggregate total consideration of the transaction is $121.6 million plus assumed liabilities.
Dallas-based NexBank SSB is acting solely in its capacity as Agent for the second lien lenders involved in the planned debt/equity conversion.
The transaction remains subject to certain closing conditions, including the completion of an agreement with the New Jersey Department of Environmental Protection to ensure compliance with the state's Industrial Site Recovery Act.
"We are pleased that we are making progress with Marcal's key constituencies," Jim Dondero, President of Highland, commented on the Court's decision. "Marcal has a great and longstanding history, brand and products. We can and will restore the company's momentum and industry leadership," Mr. Dondero added.
"We appreciate Highland's continued commitment to our company and its key constituencies," said Bob Lynch, Chief Financial Officer of Marcal Paper. "Upon the closing of the sale, Highland's financial acumen and resources will strengthen our ability to serve our customers, provide for our employees, and support our vendors," he added.
About Marcal Paper Mills – Marcal, founded in 1932, is a privately-held, family business. It employs over 900 people in its Elmwood Park, New Jersey and Chicago, Illinois manufacturing operations. The company produces over 160,000 tons of finished paper products, including bath tissue, kitchen towels, napkins and facial tissue, distributed to retail outlets for home consumption and to distributors for away-from-home use in hotels, restaurants, hospitals, offices and factories. For over fifty years, Marcal has been a leader in recycling recovered paper as a source of high-grade cellulose fiber for manufacturing tissue products. Each year, Marcal recycles over 200,000 tons of recovered paper. Marcal's slogan, "Paper from Paper, Not from Trees," ® symbolizes the commitment of the company to sustainable manufacturing.
About Highland Capital Management – Founded in 1993, the firm is a leading investment management firm specializing in alternative investments, with approximately $38 billion in assets under management. A privately held registered investment adviser, the firm is a recognized leader and innovator in the credit and structured products markets. Highland is headquartered in Dallas, Texas, with offices in New York and London. For more information, please visit www.hcmlp.com.
For more information, contact:
Highland Capital Management, LP
Thomas Clohesy
212-792-5673
thomas.clohesy@tmccommunications.com
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