Smurfit Stone Bankruptcy

Smurfit-Stone Container Corp., the largest producer of cardboard box materials in North America, on Monday filed for Chapter 11 bankruptcy protection as it looks to restructure a heavy debt amid a global credit freeze. 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 the 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-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. Chairman and Chief Executive Patrick J. Moore said in a statement that by restructuring its debt Smurfit-Stone would create a better capital structure. The company said it expects to continue operations during the bankruptcy process and has received commitments for up to $750 million in debtor-in-possession financing to fund continuing operations. Of that $750 million, some $350 million is new incremental financing, while the remainder represents replacement of existing credit.

Earlier this month, a report said Smurfit-Stone was actively exploring bankruptcy protection and had engaged a law firm and financial advisers with expertise in bankruptcy filings. Analysts responded positively to the filing. The bankruptcy comes as economic news continues to worsen. The New York-based Conference Board’s December index of leading economic indicators is expected to fall 0.3 percent in its third straight monthly decline. Further, the National Association of Realtors’ is expected to report that existing home sales fell for the third straight month in December, wrapping up the worst year in at least a decade for the troubled housing sector.

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