U.S. paper maker Appvion Inc said on Wednesday it hired investment bank Guggenheim Partners LLC to help address its $440 million debt load amid slumping sales after many consumers turned to electronic communications.
Appvion, headquartered in Appleton, Wisconsin and owned by its employees, is seeking to proactively address the debt it has coming due over the next 12 to 14 months and explore a complete refinancing of the company's capital structure, a spokesman for the paper maker said in an email.
The company announced its plans to deal with its debt burden in May on an earnings conference call.
Appvion has a revolving credit line due in 2018 which could put it under financial strain, according to credit rating agency Moody's Investors Service. Its term loan is due the following year.
Creditors holding Appvion's $250 million in bonds that mature in 2020 are organizing to negotiate a potential debt restructuring. They are working with restructuring attorneys from law firm Stroock & Stroock & Lavan LLP, and have also been interviewing financial advisors, people familiar with the matter said.
The sources asked not to be identified because the deliberations are confidential. Guggenheim declined to comment. Stroock did not immediately return a request for comment.
Appvion's bonds were trading well below face value on Wednesday at about 55 cents on the dollar, indicating investor concerns about full repayment, according to Thomson Reuters data.
In addition to manufacturing carbonless and other specialty papers, Appvion provides paper coatings.
Competitor Verso Corp emerged from bankruptcy last year. NewPage Corp, which Verso acquired, filed for bankruptcy in 2011.
In the quarter ended April 2, Appvion's profits fell to $6.6 million from $9.6 million during the year-ago period due to a stronger U.S. dollar, the company said. Appvion has said it is paying for advisory services to support profit improvement and plans to save $25 million this year.
Appvion's employees, which now number about 1,400, bought the company in 2001. Costs relating to the employee stock ownership plan (ESOP) are a significant use of the company's cash, ratings agency Standard & Poor's noted in a research opinion from 2016.
Appvion's corporate controller Luke Kelly will replace chief financial officer Tom Ferree who is retiring June 30, the company announced last week.
The company was founded in 1907 and last year celebrated the 150th anniversary of a paper mill it acquired in Roaring Spring, Pennsylvania. Appvion was known as Appleton Papers until 2013.
(Reporting by Jessica DiNapoli in New York; Editing by Andrew Hay)