BATAVIA, Ill. (Business Wire) -- Portola Packaging, Inc.:
-- Company Files Chapter 11 Petition For Its Previously Announced Pre-Packaged Reorganization After Receiving Overwhelming Support from 100% of the Company's Secured Lenders and Holders of Approximately 90% of its Senior Notes
-- Company Secures $79 Million DIP Financing To Secure Ongoing Operations
-- Company Will Reduce Long-Term Debt Obligations by $180 Million
-- Chapter 11 Reorganization Not Expected To Impact On-Going Business Relationships
-- Trade Creditors, Suppliers And Customers To Be Paid In The Ordinary Course Of Business
-- Company Appoints New Board to Manage Restructuring
Portola Packaging, Inc. (the "Company"), one of the largest manufacturers of tamper-evident closures, plastic containers and related products and engineering services for the dairy, juice and water industries, announced today that it filed a voluntary Chapter 11 petition to reorganize in the United States Bankruptcy Court for the District of Delaware. In connection with the filing, the Company confirmed that all of its secured lenders and holders of approximately 90% in aggregate principal amount of its 8-1/4% Senior Notes due 2012 agreed to a voluntary and consensual restructuring of the Company pursuant to the previously announced Restructuring Support Agreement dated July 24, 2008. Pursuant to the proposed plan of reorganization, holders of the Senior Notes will receive 100% of the common stock of reorganized Portola in exchange for their claims. Wayzata Investment Partners LLC is expected to be the Company's controlling shareholder upon the Company's emergence from bankruptcy. The Company's plan of reorganization will reduce its long term debt obligations by $180 million. The Company anticipates completing its pre-packaged reorganization and emerging from Chapter 11 in mid-October, 2008.
Importantly, under the restructuring plan, all obligations owed to trade creditors, suppliers, customers and employees in the ordinary course of business will be unimpaired and unaffected by the restructuring.
The Company also announced today that it has reached agreement with its existing secured lenders to provide the Company with debtor-in-possession financing of $79 million to pay off the outstanding indebtedness under the Company's existing secured facilities and to finance its ongoing operations.
The Company also announced that its President and Chief Executive Officer, Brian Bauerbach, and its Chief Financial Officer, John LaBahn, and its General Counsel, Kim Wehrenberg, have been appointed as the sole directors of the Company and will oversee the restructuring. The Company thanks the outgoing directors for their service and support of the Company and the Restructuring Support Agreement.
Mr. Bauerbach stated, "We are pleased to have achieved such strong support for a consensual restructuring that dramatically improves our balance sheet, reduces our annual cash interest obligations by approximately $15 million, and enables continued reinvestment in our products and future growth. We are thrilled to have the continued support of Wayzata and look forward to its long term commitment to the business."
In connection with the filing, Portola is seeking approval for a variety of first day motions that will allow it to continue to manage operations in the ordinary course. The motions include requests to make wage and salary payments and other benefits to employees and to pay critical vendors, suppliers, trade creditors and certain other pre-petition trade claims. This relief will allow the Company to operate its business without interruption while it restructures. The Company will also seek interim approval of its $79 million debtor-in-possession financing. The motions are typical in Chapter 11 bankruptcy cases and court approval is expected to be granted promptly. The restructuring plan provides for payments to providers of goods and services delivered post-petition in the ordinary course of business.
About Portola Packaging, Inc.
Portola Packaging is a leading designer, manufacturer and marketer of tamper-evident plastic closures used in dairy, fruit juice, bottled water, sports drinks, institutional food and other non-carbonated beverage markets. The Company also produces a wide variety of plastic bottles for use in dairy, water and juice markets, including various high density bottles, as well as five-gallon polycarbonate water bottles. In addition, the Company designs, manufactures and markets capping equipment for use in high speed bottling, filling and packaging production lines. Portola is also engaged in the manufacture and sale of tooling and molds used for blow molding. Portola's subsidiary, Portola Tech International, is also a leading manufacturer, marketer and designer of plastic packaging components for the cosmetic, fragrance and toiletries industry. For more information about Portola Packaging, visit the Company's web site at www.portpack.com.
Portola Packaging, Inc.
John G. LaBahn
Senior Vice President
Chief Financial Officer
(630) 326-2074
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