, a cardboard-box maker weakened by decreased demand and a heavy debt load, has filed for federal Chapter 11 bankruptcy protection.
The Chicago-based company, which employs nearly 22,000 people working at about 150 facilities across North America and in Asia, said it filed for protection from creditor claims in U.S. Bankruptcy Court in Wilmington, Del., while it develops a financial reorganization plan. Its Canadian units will file under the companies' Creditors Arrangement Act in the Ontario Superior Court of Justice, the company said.
Smurfit also announced that it has received commitments for up to $750 million in debtor-in-possession financing to fund continuing operations.
Smurfit-Stone has been struggling to repay its debt, which at the end of the third quarter was $3.5 billion -- nearly half its yearly revenue of roughly $7.5 billion.
"Over the past decade, we built one of North America's premier containerboard and packaging companies," Patrick J. Moore, chairman and CEO. "But, our financial performance has not reflected the full potential of our earnings power due to higher cost operations and burdensome debt levels dating back to the original formation of the company. As a result of our three-year transformation program, we have been focused on improving our operating performance and our operations are now well invested and far more cost effective.
"Yet, the acceleration of the unprecedented global economic recession has weakened demand for packaging, and the frozen credit markets have prevented an out-of-court refinancing of our capital structure," Moore said. "While this is not the outcome we anticipated, we are taking this action to become a more financially healthy company.
"This combination of a modern, cost-effective operating platform and a reorganized capital structure through Chapter 11 will represent a new beginning for Smurfit-Stone. I am confident that we will emerge a much stronger company structured for future growth and greater profitability."
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