Chesapeake Corporation Reaches Agreement With Lenders on Forbearance Extension
December 11 2008 - 4:11PM
PR Newswire (US)
RICHMOND, Va., Dec. 11 /PRNewswire-FirstCall/ -- Chesapeake
Corporation (OTC:CSKE.PK) (BULLETIN BOARD: CSKE.PK) today announced
that it has signed an amendment and extension of the forbearance
agreement with the required lenders under its $250-million Senior
Secured Credit Facility. Under the agreement, the lenders have
agreed that they will forbear from exercising their rights and
remedies against the corporation and its subsidiaries in respect of
(i) existing financial condition covenant defaults and (ii) the
corporation's failure to pay the interest payment that was due on
November 15, 2008, to the holders of its 10-3/8% Senior
Subordinated Notes (the "Subordinated Note Holders") under the
Senior Secured Credit Facility until December 23, 2008, subject to
the terms and conditions of the forbearance agreement. "This
extension on the forbearance agreement provides us additional time
to finalize arrangements for the short- and long-term financial
liquidity and financial restructuring we need," said Andrew J.
Kohut, Chesapeake president and chief executive officer. "We
continue to make good progress on our restructuring plans with our
lenders and with a group of holders of our subordinated debt." The
agreement of the lenders described above is subject to compliance
by the corporation and the other Chesapeake subsidiary borrowers
under the Senior Credit Facility with the terms and conditions set
forth in the forbearance agreement. In addition, the lenders have
reserved the right to terminate the forbearance agreement
immediately in the event that the Subordinated Note Holders
accelerate payment of the 10-3/8% Senior Subordinated Notes and
pursue any remedy against Chesapeake on account of any payment
default related thereto. The corporation expects to be able to
comply with the requirements of the forbearance agreement, but if
it is not able to do so, or the forbearance agreement terminates,
the lenders under the Senior Secured Credit Facility could require
immediate payment of all amounts outstanding under the Senior
Secured Credit Facility, terminate their commitments to lend under
the Senior Secured Credit Facility and, pursuant to cross-default
provisions in many of the instruments that govern other outstanding
indebtedness of the corporation, immediate payment of other
outstanding indebtedness could be required, all of which would have
a material adverse effect on the business, results of operations
and financial condition of the corporation and would raise
substantial doubts about its ability to continue as a going
concern. Chesapeake Corporation protects and promotes the world's
great brands as a leading international supplier of value-added
specialty paperboard and plastic packaging. Headquartered in
Richmond, Va., the company is one of Europe's premier suppliers of
folding cartons, leaflets and labels, as well as plastic packaging
for niche markets. Chesapeake has 44 locations in Europe, North
America, Africa and Asia and employs approximately 5,400 people
worldwide. This news release, including the comments by Andrew J.
Kohut, contains forward-looking statements that are made pursuant
to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The accuracy of such statements is subject to a
number of risks, uncertainties and assumptions that may cause
Chesapeake's actual results to differ materially from those
expressed in the forward-looking statements including, but not
limited to: the company's inability to realize the full extent of
the expected savings or benefits from restructuring or cost savings
initiatives, and to complete such activities in accordance with
their planned timetables and within their expected cost ranges; the
effects of competitive products and pricing; changes in production
costs, particularly for raw materials such as folding carton and
plastics materials, and the ability to pass through increases in
raw material costs to customers; fluctuations in demand; possible
recessionary trends in U.S. and global economies; changes in
governmental policies and regulations; changes in interest rates
and credit availability; changes in actuarial assumptions related
to pension and postretirement benefits plans and the ability to
amend the existing U.K. pension recovery plan; changes in
liabilities and cash funding obligations associated with the
company's defined benefit pension plans; the ability to remain in
compliance with current debt covenants and to refinance the senior
revolving credit facility; fluctuations in foreign currency
exchange rates; and other risks that are detailed from time to time
in reports filed by Chesapeake with the Securities and Exchange
Commission. DATASOURCE: Chesapeake Corporation CONTACT: Media
Relations, Joseph C. Vagi, Manager of Corporate Communications,
+1-804-697-1110, , or Investor Relations, Joel K. Mostrom,
Executive Vice President & Chief Financial Officer,
+1-804-697-1147, , both of Chesapeake Corporation Web Site:
http://www.cskcorp.com/
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