Court File No. CV-09-7966-000L ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED AND IN THE MATTER OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS AMENDED AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF SMURFIT-STONE CONTAINER CANADA INC. AND THE OTHER APPLICANTS LISTED ON SCHEDULE "A" Applicants RESPONDING MOTION RECORD OF THE APPLICANTS (RETURNABLE OCTOBER 7, 2009) September 22, 2009 STIKEMAN ELLIOTT LLP 5300 Commerce Court West 199 Bay Street Toronto, Ontario M5L 1B9 Sean F. Dunphy LSUC#24941J Tel: (416) 869-5662 Alexander D. Rose LSUC#49415P Tel: (416) 869-5261 Fax: (416) 947-0866 Lawyers for the Applicants 5596060 v1
Transcript
Court File No. CV-09-7966-000L
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THE COMPANIES' CREDITORS
ARRANGEMENT ACT, R.S.C. 1985, c. C-36, ASAMENDED
AND IN THE MATTER OF THE BANKRUPTCY AND
INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISEOR ARRANGEMENT OF SMURFIT-STONECONTAINER CANADA INC. AND THE OTHERAPPLICANTS LISTED ON SCHEDULE "A"
Applicants
RESPONDING MOTION RECORD OF THE APPLICANTS(RETURNABLE OCTOBER 7, 2009)
September 22, 2009
STIKEMAN ELLIOTT LLP
5300 Commerce Court West199 Bay StreetToronto, Ontario M5L 1B9
Sean F. Dunphy LSUC#24941JTel: (416) 869-5662Alexander D. Rose LSUC#49415PTel: (416) 869-5261Fax: (416) 947-0866
Lawyers for the Applicants
5596060 v1
2
TO: THE ATTACHED SERVICE LIST
5596060 vl
IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, C. c-36, ASAMENDED AND IN THE MATTER OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS
AMENDED AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF SMURFIT-STONE CONTAINER CANADA INC. AND THE OTHER APPLICANTS LISTED ON SCHEDULE "A"
SERVICE LISTLast updated on August 4, 2009 - 4:00 p.m.
DEBORAI I B. ZINK (Senior Counsel)E-mail: I),hE>rah.zli 1,l.A.aaru r tr.c,f a)
AURELIUS CAPITAL MANAGEMENT, LP Aurelius Capital Management,
DAN GROPPERE-mail: ilarrol^per: i.<ulr
';sl
•s ttprt< .Li,cton.
GABRIELLA SKIRNICKE -Mail:t;;
kirrlicl,
i;; irclitrsapieal., ntt
LP
BENNETT JONES LLP (416) 863-1716 Canadian Counsel for the3400 One First Canadian Place Official Committee ofP.O. Box 130 Unsecured Creditors ofToronto, Ontario M5X 1A4 Smurfit-Stone Container
KEVIN J. ZYCII (416) 777-5738Corporation, el al
E-mail: r_yehk'afhe^intt onLs.coul
S. RICHARD ORZY (416) 777-5737E-mail: Ear/vrrhrnltettiones.eo n
BLAKE, CASSELS & GRAYDON LLP (416) 863-2400 (416) 863-2653 JPMorgan Chase Bank, N.A.,Box 25, Commerce Court West Toronto Branch199 Bay Street, Suite 2800,Toronto ON M5L, 1A9Canada
JAMES BUELL (314) 259-2373E-mail: I.uix ,:.Li2 )).a .a rc.
,c rn
CALEYWRAY LABOUR/EMPLOYMENT LAWYERS (416) 366 3293 Communications, Energy and1600-65 Queen Street West Paperworkers Union of CanadaToronto, ON, M5H 2M5 (CEP)
llarold E. Caley (416) 775 4672E-mail: ca:r:.rirc:E
tisr.es.corn
Jesse B. Kugler (416)-775-4677Email:
1,;utzlei3, itt_tlc.titE.,^v_u
i,i
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Counsel Telephone Fax Counsel For
CASSELS BROCK & BLACKWELL LLP2100 Scotia Plaza, 40 King Street WestToronto, Ontario, M5H 3C2
JOHN N. BIRCHE-mail:
?iruh,'ii c:3yy ^i l1rt3ch eoni
(416) 860 5225 (416) 640 3057
Chemtrade Logistics Inc.
COLUMBUS HILL CAPITAL MANAGEMENT, L.P.830 Morris Turnpike 2nd FLShort Hills, NJ 07078
DAVID W. AMBROSIAE-mail:
;:;i^ u,£En^i:,ru7i<arca;ltsi.zhusl,ill.vol a
(973) 921-3425 (973) 921-3455 Noteholders of StoneContainer Finance Company ofCanada II
DELOITTE & TOUCHE INC.181 Bay StreetBrookfield Place, Suite 1400Toronto, Ontario M5J 2V1
PAUL CASEYE-mail: 17«€1, :.,casc y .,g: lc 1.<sitl.c.&:1
CATHERINE HRISTOW
E-mail: Lhns3u+r'ir lfasaitt^. as
(416) 601-59991-866-859-6954
(416) 775-7172
(416) 775-8831
(416) 601-6690 Monitor
FLUXGOLD IZSAK JAEGER LLP100 York Blvd., Suite 220Richmond Hill, ON L4B IJ8
BRUCE R. JAEGERE-mail:
(905) 763-3770
Ext. 212
(905) 763-3772 Torbram Electric SupplyCorporation
N'1'1 CONSULTINGSuite 2733, 1'D Canada Trust Tower161 Bay StreetToronto, ON, M5J 2S1
NIGEL D. MEAKINE-mail: til x,Il:1 , ICilh,lta;t/i)it ... St€1tlPit r .t,'
(416) 572-2285 (416) 572-2201
Financial advisor to theunsecured creditors' committee
COWLING LAFLEUR HENDERSON LLP1 Place Ville Marie 37th floorMontreal, QC
(514) 878-9641 (514) 878-1450 Industries Wajax
11313 31'4
LOUISE LALONDEE-mail: loin
e.l ri<rnc(e; t':;i?i4:I, 1icom(514) 392-9557
HARRISON PENSA LLP450 Talbot StreetP.O. Box 3237London, ON N6A 4K3
(519) 679-9660 (519) 667-3362
MICHAEL CASSONEE-mail: rnctrssorrcv'h:ir'risi^n;? n t^.irhtl
(519) 661-6765
KOSKIE MINSKY I.LP (416) 977-8353 (416) 977-3316 Smurfit-Stone SERF Retirees20 Queen Street West, Suite 900Toronto, Ontario MSII 3R3
Protection Committee
ANDREW J. I IATNAYE-mail alr,rirr<r^fFri:^t^l:rtis.ih
ANDREA MCKINNONE-mail: ti,
kilon_i.ifir;:;r;111u+_ti...e
(416) 595-2083 (416) 204-2872
KRAMER LEVIN NAFTALIS & FRANKEL LLP (212) 715-8000 U.S. Counsel for the Official1 177 Avenue of the Americas Committee of UnsecuredNew York, NY 10036 Creditors of Smurfit-StoneU.S.A. Container Corporation, et al
ROBERT T. SCHMIDTE-mail:ch r
t;tom
(212) 715-9527
DOUGLAS MANNALE-mail: ^Io
gl,ti r;kr.etmllcrlcv: n.ct rr.(212) 715-9313
JENNIFER SHARRETE-mail: j51t_arr•.:
i^ril74rlcliilrc,in
(212) 715-9516
JASON RAPPAPORTE-mail: .tr;l!?1>apor<t,i.rarrt
ekifi?
(212) 715-9364
LOOPSTRA NIXON LLP (416) 748-4766 (416) 746-8319 Preferred Polymer CoatingsWoodbine place, 135 Queens Plate Drive, Suite 600Toronto, ON M9W 6V7
MICHAEL B. MCWILLIAMSE-mail: 1 l.tr;new llifari ol lo;r3_;..,coftl
Ltd.
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Counsel Telephone Fax Counsel For
MACLEOD DIXON LLPCanadian Pacific TowerThe Toronto-Dominion Centre100 Wellington Street West, Suite 500Toronto, ON M5K 1111
ROBERT FRANKE-mail: 1ohcrrt,,fs ,ttik, raaclcoLltiiticn ,l.com.
(416) 202-6741 (416) 360-8277
Shell Energy North America(Canada), Inc.
MARTIN SHEPPARD FRASER LLPDowntown Professional Building4701 St. Clair Avenue, 2nd FloorP.O. Box 900, Niagara Falls ON 1,2E 6v7
GARY H. ENSKATE-mail: 'ir\,(^^.1lsillut1rtiulre r.^rtn
(905) 354-1611 (905) 354-5540 Pacific Northern RailContractors Inc.
MCCARTHY TETRAULT LLPSuite 5300, Toronto Dominion Bank TowerToronto ON M5K 1E6
KEVIN MCELCHERANE-mail: k mcclshcranrrf n.fcca€thv.eat
MALCOLM M. MERCERE-mail: (,`.tn
rcc
t !r cc:;sr Vat.cu
I LEATHER L. MEREDITHE-mail:
(416) 601-7539
(416) 763-0832
(416) 601-7856
(416) 868-0673 Aurelius Capital Management,LP and Columbus Hill CapitalManagement, L.P.
MINISTRY OF THE ATTORNEY GENERALLEGAL SERVICES BRANCHFINANCIAL SERVICES COMMISSION OFONTARIO17th Floor - Box 855160 Yonge StreetToronto ON M2N 6L9
MARK BAILEYE-mail: mlrulc:lCrrt e(r.cnr.ca
(416) 590-7555 (416) 590-7070 Superintendent of FinancialServices
ONTARIO MINISTRY OF REVENUE6-33 King St WOshawa, ON L1 H 81-15
CHANTALE BOURREE-mail: c11<^uth4g.ba ta,
nt i4)s. u
1 866 668-8297
Ext. 18515
(905) 436-4524 Province of Ontario
PRICEWATERHOESECOOPERS INC.77 King Street West,Toronto, ON, M5K IG8
PETER V. PANTALEOE-mail: ;Sl,.iitiElet2ir;ti,lsxu.c:or
(212) 455-2220
STIKEMAN ELLIOT LLP (416) 869-5500 (416) 947-0866 Smurfit-Stone Container5300 Commerce Court West199 Bay StreetToronto, ON M5L I B9
Canada Inc.
SEAN DUNNIYE-mail: :_d_u€ip(i}_'irslin.enl ,ti,u,,ni
(416) 869-5662
ALEXANDER ROSEE-mail:;:s'osc F.G::titil i`atii3.l7 .. corn.
(416) 869-5261
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Counsel Telephone Fax Counsel For
SUPERINTENDENT OF FINANCIAL SERVICES (416) 226-7793 (416) 226-7777 Superintendent of FinancialFINANCIAL SERVICES COMMISSION OF ServicesONTARIOPENSION PLANS BRANCH5160 Yonge Street, 4th FloorP.O. Box 85North York, ON M2N 6L9
ANNA VANIE-mail: ^1nn,t.Y'aili ^r'f co.<zi^ti.ErF.;G
THORNTONGROUTFINNIGAN LLP (416) 304 -1616 (416) 304-1313 Casco inc. & Corn ProductsSuite 3200, Canadian Pacific Tower International, Inc.100 Wellington Street WestToronto, Canada, M5K 1K7
JOHN T. PORTER (416) 304-0778Email: jportc!:21^Lc i
KIM G. FERREIRA (416) 304-0591E-mail: k,t4trr
il.?:(?lk_._.s?.
TRANSFORCE INC. (514) 331-4000 (514) 337-4200 Besner Transport8585 Trans-Canada Hwy, Suite 300 TF1 2 SECSt. Laurent, QC 114S IZ6 Gregoire Transport (TF1 15
PATRICK-JAMES BLAINE (514) 331-4154Sec)1FI Transport 2 L P
E-mail: pbi ti, ?j..
r;i?:!!i,=ji?rcc i.u IT I "Transport 2 I, I' (Landry)Patriot Freight Services Inc.Transport 'I'hibodeau
UNITED STEEL, PAPER AND FORESTRY, (416) 487-1571 (416) 482-5548 United SteelworkersRUBBER, MANUFACTURING, ENERGY, ALLIEDINDUSTRIAL AND SERVICE WORKERSINTERNATIONAL UNION (UNITEDSTEELWORKERS)800-234 Eglinton Ave. EastToronto, ONM4P 1K7
PAULA 'TURTLE (416) 544-5980 (416) 487-8826
E-mail: war* ct;tt1a,.
YOUNG CONAWAY STARGATT & TAYLOR (302) 571-6600 (302) 5'71-1253 Smurfit-Stone ContainerThe Brandywine Building Corporation (US counsel)1000 West Street, 17th FloorP.O. Box 391Wilmington, DE 19899-0391
ROBERT S. BRADY (302) 571-6690 (302) 576-3283E-mail: rhmd -!a v cst.cam
EDMON L. MORTON (302) 571-6637 (302) 576-3320E-mail: crun toll.o:ycst.cumn
Court File No. CV-09-7966-000L
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THE COMPANIES CREDITORS
ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF THE BANKRUPTCY AND
INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE ORARRANGEMENT OF SMURFIT-STONE CONTAINERCANADA INC. AND THE OTHER APPLICANTS LISTEDON SCHEDULE "A"
Applicants
INDEX
TAB DESCRIPTION PAGE
1. Affidavit of Dean Jones, sworn September 21, 2009 1 - 7
A. Exhibit "A" to the affidavit of Dean Jones, sworn January25, 2009
8 - 55
B. Exhibit "B" to the affidavit of Dean Jones - Amended andRestated Credit Agreement dated February 25, 2009
56 - 219
C. Exhibit "C" to the affidavit of Dean Jones - Amended andRestated Initial Order dated January 26, 2009
220 - 247
D. Exhibit "D" to the affidavit of Dean Jones - Indenturedated July 20, 2004
248 - 339
E. Exhibit "E" to the affidavit of Dean Jones - LoanAgreement dated July 20, 2004
340 - 346
5596060 vl
F. Exhibit "F" to the affidavit of Dean Jones - ForwardPurchase Agreement dated July 20, 2004
347 - 352
G. Exhibit "G" to the affidavit of Dean Jones - SubscriptionAgreement dated July 20, 2004
353 - 357
H. Exhibit "H" to the affidavit of Dean Jones - Cross-BorderInsolvency Protocol
358 - 371
I. Exhibit "I" to the affidavit of Dean Jones - ClaimsProcedure Order dated June 25, 2009
372 - 387
J. Exhibit "J" to the affidavit of Dean Jones - Order datedJune 22, 2009
388 - 395
K. Exhibit "K" to the affidavit of Dean Jones - Order datedAugust 17, 2009
396 - 398
L. Exhibit "L" to the affidavit of Dean Jones - Motionreturnable August 17, 2009
399 - 405
M. Exhibit "M" to the affidavit of Dean Jones - Letter datedAugust 28, 2009
406 - 407
N. Exhibit "N" to the affidavit of Dean Jones - Letter datedSeptember 1, 2009
408 - 422
55960611 vl
TAB 1
1
Court File No. CV-09-7966-000L
ONTARIOSUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THE COMPANIES' CREDITORSARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF THE BANKRUPTCY AND INSOLVENCYACT, R.S.C. 1985, c. B-3, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE ORARRANGEMENT OF SMURFIT-STONE CONTAINER CANADAINC. AND THE OTHER APPLICANTS LISTED ON SCHEDULE "A"
Applicants
AFFIDAVIT OF DEAN JONES(sworn September 21, 2009)
I, Dean Jones, of the City of Montreal in the Province of Quebec, MAKE
OATH AND SAY:
Introduction
1. I am the Senior Counsel, International Affairs & Assistant Secretary of
Smurfit-Stone Container Canada Inc. As such, I have knowledge of the matters
herein deposed.
2. Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in my affidavit sworn January 25, 2009 (the "Jones
Affidavit"), a copy of which (without exhibits) is appended to this my affidavit as
Exhibit "A".
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Finance II and the Insolvency Proceedings
3. As mentioned at paragraph 8 of the affidavit of Dan Gropper, sworn
September 14, 2009 (the "Gropper Affidavit"), SSCC, SSCE, the Applicants listed on
Schedule "A" hereto (the "Applicants"), the Partnerships listed on Schedule "B"
hereto (the "Partnerships") and the other members of the Smurfit Group listed on
Schedule "C" hereto (together with the Applicants and Partnerships, the "U.S.
Debtors") filed a voluntary petition for relief from their creditors under title 11 of
chapter 11 of the United States Bankruptcy Code, 11 U.S.C. § 101-1532 (the "U.S.
Bankruptcy Proceedings") in the United States Bankruptcy Court for the District of
Delaware (the "U.S. Court") on January 26, 2009. In anticipation of the
commencement of the U.S. Bankruptcy Proceedings, a credit agreement was
negotiated in order to, amongst other things, finance the Applicants' and
Partnerships' post-filing working capital requirements (the "DIP Facility"). A
version of the DIP Facility that was prepared to show subsequent amendments to the
amended and restated DIP Facility is appended (without exhibits) to this my
affidavit as Exhibit "B".
4. Later on January 26 ,h, SSC Canada and the other Applicants and Partnerships
were granted protection from their creditors pursuant to the Companies' Creditors
Arrangement Act, R.S.C. 1985, c. C-36, as amended, and the Initial Order of the
Honourable Mme. Justice Pepall, as amended and restated, a copy of which is
appended to this my affidavit as Exhibit "C" (the "CCAA Proceedings").
3
3
5. Stone Container Finance Company of Canada II ("Finance II"), a direct wholly
owned subsidiary of SSCE, is both an Applicant in the CCAA Proceedings and a U.S.
Debtor in the U.S. Bankruptcy Proceedings. Copies of the trust indenture (obtained
from the website of the U.S. Securities and Exchange Commission), loan agreement,
forward purchase agreement and subscription agreement that were entered into in
July 2004 relating directly or indirectly to Finance II and the transactions referenced
at paragraphs 9 and 10 of the Gropper Affidavit are appended to this my affidavit as
Exhibits "D" to "G", respectively.
6. Given the cross-border nature of the proceedings, this Court and the U.S.
Court each entered an order approving a cross-border insolvency protocol, a copy of
which is appended to this my affidavit as Exhibit "H".
7. On June 25, 2009, Mme. Justice Pepall issued the Claims Procedure Order in
the CCAA Proceedings, setting a claims bar date of August 28, 2009 and soliciting
certain proofs of claim. A copy of the Claims Procedure Order (without exhibits) is
appended to this my affidavit as Exhibit "I".
8. Similarly, the U.S. Court entered an order establishing August 28, 2009 as the
deadline for the filing of certain proofs of claim against the U.S. Debtors, a copy of
which is appended to this my affidavit as Exhibit "J". A further order relating to
Finance II was entered on consent on or about August 17, 2009, a copy of which is
appended to this my affidavit as Exhibit "K". To date, no steps have been taken in
the CCAA Proceedings or the U.S. Bankruptcy Proceedings to object to or disallow
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4
any intercompany claims, including any claims that Finance II may have against SSC
Canada or SSCE.
9. On or about July 27, 2009, the indenture trustee for the 7.375% Senior Notes
due July 15, 2014 issued by Finance II brought a motion seeking its appointment to
the statutory committee of unsecured creditors in the U.S. Bankruptcy Proceedings
(the "UCC"). A copy of the motion is appended to this my affidavit as Exhibit "L".
The motion was withdrawn and the indenture trustee was instead appointed by
agreement as an ex officio member of the UCC.
Correspondence between Sidley Austin and Greenberg Traurig
10. On August 28, 2009, Matthew Clemente, a partner with Sidley Austin LLP,
counsel to the U.S. Debtors, sent a letter to Nancy Mitchell of Greenberg Traurig, a
copy of which is appended to this my affidavit as Exhibit "M".
11. On September 1, 2009, in furtherance of Mr. Clemente's August 28 th letter,
Richard Kapnick, a partner with Sidley Austin, sent Ms. Mitchell a further letter, a
copy of which is appended to this my affidavit as Exhibit "N".
SWORN BEFORE ME at the City ofMontreal, on September 21, 2009.
issioner for Taking AffidavitsDEAN JONES
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SCHEDULE "A"
Smurfit-Stone Container Canada Inc.
3083527 Nova Scotia Company
MBI Limited/Limitee
639647 British Columbia Ltd.
B.C. Shipper Supplies Ltd.
Specialty Containers Inc.
605681 N. B. Inc.
Francobec Company
Stone Container Finance Company of Canada II
6
6SCHEDULE "B"
Smurfit-MBI
SLP Finance General Partnership
-7
SCHEDULE "C"
Smurfit-Stone Container Corporation
Smurfit-Stone Container Enterprises, Inc.
Lot 24D Redevelopment Corporation
Atlanta & St. Andrews Bay Railroad Co.
Cameo Container Corporation
Stone International Services Corporation
Calpine Corrugated LLC
Stone Global, Inc.
Stone Connecticut Paperboard Properties, Inc.
Smurfit-Stone Puerto Rico, Inc.
Smurfit Newsprint Corporation
SLP Finance I, Inc.
SLP Finance II, Inc.
SMBI Inc.
7
TAB A
This is Exhibit "A" referred to in the Affidavit ofDean Jones
solemnly declared before me in Montrealthis 21st day of September, 2009
L^06tIass^14Pascale Leme!In
# 166449
Prvvv
Commissioner of Oaths for all of thedistricts of the province of Quebec
Court File No..
OwrA12I0 .SUIi1?ItTOIt COUNT OP JUSTICE
COMMERCIAL LIST
IN THE MA'T'ER OF THE COMPANIES' CREDITORSARRANGEMENT ACT, R.S.C. 1985, c: C-36, AS AMENDED
AND IN THE MATTER OF THE BANKRUPTCY AND INSOLVENCYACT, R.S.C. 1985, c. B-3, AS AMENDED
AND IN THE MA` TER OF A PLAN OF COMPROMISE ORARRANGEMENT OP SMURFIT-STONE CONTAINER CANADAINC. AND THE OTHER APPLICANTS LISTED ON SCHEDULE "A"
Applicants
AFFIDAVIT OF DEAN JONES(sworn January. 25, 2009)
I, Dean Jones, of the City of Montreal iri the Province of Quebec, MAKE
OATH AND SAY:
1. I an the Senior Counsel, International Affairs & Assistant Secretary, of
SinUrfit-Stone Container Canada Inc. ("SSC Canada") and .as such have knoWledge'
ot'the matters .to which I hereinafter depose.
T. INTRODUCTION
2. This affidavit is sworn in support of an application by SSC Canada and the
other Applicants listed on Schedule "A" hereto (together, the "Applicants") for
protection from their creditors pursuant to the Companies ' Creditors Arrangement Act,
R.S.C. 1985, c. C-36, as amended (the "CCAA"). While the Partnerships listed on
Schedule. "B" hereto (the "Partnerships") are not applicants in this proceeding, the
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Applicants seek to have the'stay of proceedings extended to the Partnerships as they
carry on operations integral to the business of the Applicants.
3. Each of the Applicants is either a direct or indirect subsidiary of Smurfit-Stone
Container Corporation, a Delaware corporation ("SSCC"), that, together with its
subsidiaries (together, the "Smurfit-Stone Group"), is North America's Second
'largest: integrated manufacturer of paperboard and paper based packaging and is
one of the world's largest paper recyclers. SSC Canada together with the other
Applicants and Partnerships is also the second largest integrated manufacturer of
such products in Canada. SSCC and certain of its direct. and indirect subsidiaries
intend to file for protection from their creditors under title 11 of chapter 11 of the
..
.United States Bankruptcy Code, 11 U.S.C. §§ 1014532, in the United States Bankruptcy
'Court for the . l)istriet of Delaware (the ^7S B'anlcrupttry Filing;") early on January 26,
.."2009:
4: The principal secured credit facility available to the Applicants and
Partnerships is a facility that covers both the Smurfit-Stone Group's Canadian and
American operations. It was established pursuant to an agreement between SSCC,
Smurfit-Stone Container Enterprises, Inc, (" SSSCF") and SSC Canada and TPIvIorgan
Chase Bank, Deutsche Bank Trust Company Americas, Deutsche Bank AG and other
leaders; together with other loan parties (the "Pre-Filing Credit Agreement"). As of
,January 23, 2009, the total amount ' outstanding under the Pre-Filing Credit
Agreement was approximately US$1 billion: Approximately US$367 million of the
. SSD3395 ,17
10
amount outstanding under the Pre-Filing Credit Agreement was attributable to SSC
Canada. In addition to the Pre-Filing Credit Agreement, a significant portion of the
Smurfit-Stone Group's Canadian operations relies upon a CDN$70 million accounts
receivable securitization program established pursuant to a Receivables Agreement
(defined below) for liquidity. As of January 23, 2009, the outstaridit g balance under
the Canadian receivables program was CDN$38 million. The US Bankruptcy Filing
would constitute an event of termination under the Pre-Filing Credit Agreement and
the Receivables Agreement that would eliminate the Applicants' ability to carry on
business without the protection of the CCAA.
5: In anticipation of the US Bankruptcy Filing,. a credit agreement amongst SSCC,
SSCE, SSC Canada and the other Applicants and Partnerships, such lenders as may
be party to Such agreement from time to time (together, the " DIP Lenders"),
JPIVIorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, and.
JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent and
Canadian Collateral Agent, was negotiated in order to, amongst other things, finance
the Applicants' and Partnerships' post-filing working capital requirements, general
corporate purposes and perirnitted capital expenditures and to refinance the accounts
receivable securitization program in Canada (the. "DIP Facility"). The DIP Facility
will be substantially in the form appended to this my affidavit as Exhibit "A".
6.
The most significant features of the DIP Facility are as follows:
(a)
Both SSCE and SSC. Ca± ada are b rrowers under the DIP Facility;
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(b)
The total commitment under the DIP Facility is US$750 million,comprised of US$315 million in revolving facilities available to both
'SSCE and SSC Canada; a tJS$400 million term loan available to SSCE;and a US$35 million term loan available to SSC Canada;
All obligations of SSCE are guaranteed by SSCC• and the US Debtors(defined below at parag aph.104) other than S1vlEl Inc., and also by theApplicant SSC Canada (litit none of the other Applicants or thePartnerships);
(d) The obligations of SSC Canada are guaranteed by the other Applicantsand the Partnerships and the US Debtors; and
(e) The obligations of the Applicants and the Partnerships are secured byeach of a superpriority charge and a security interest over all of theirpresent and future assets with priority over all existing liens andsecurity, including the under the Pre-Filing Credit Facility.
The DTP Lenders are unwilling to extend the DIP Facility to SSC Canada, for
the "benefit of itself and the other Applicants and Partnerships, without SSC Canada's
guarantee of the obligations of SSCE under the DIP Facility. Without the DIP
Facility, the Applicants and Partnerships would (a) be required to repay amounts
owing under the Pre-Filing Credit Agreement; (b) no longer be able to benefit from
the accounts receivable securitization program; (c) have no access to operating credit;
(d) not be able to operate in the ordinary course; and (e) not be able to satisfy their
ongoirig.tdiligat ons to their employees, landlords, ' suppliers and other stakeholders.
Thus, the Applicants are insolvent:
8. It is not practicable for the Applicants and Partnerships to find separate
alternate financing on a stand-alone basis, particularly financing guaranteed by the
US Debtors. The business of the Applicants and Partnerships is inextricably linked to
that of the. US Debtors: The Applicants' acid partnerships' executive tnariagerrient,
(c)
5503i9S v17
125
reporting, financing and cash management and many of their administrative,
procurement and logistics functions, are carried on in the United States by the US
Debtors, as described below. Even if stand-alone financing could be obtained, any
replacement lender in this. proceeding would need, at the very least to (a) repay the
entire amount of the Applicants' and Partnerships' indebtedness under the Pre-Filing
Credit Agreement and the accounts receivable securitization program; (b) provide
liquidity for ongoing operations; (c) take into account the court-ordered
administrative and directors ' charges propOSed to be created in this proceeding in
the amount of $13.6 million; and (d) conduct the necessary due diligence to conclude
such a transaction.
9. In this situation, where their parent company will make the US Bankruptcy
Filing, the Applicants and Partnerships do not have time to negotiate and close a
transaction for stand-alone replacement financing to fund this proceeding, even if it.
were available in the current credit environment. It is my belief that the DIP Facility
is the only available option for the Applicants and Partnerships to continue to
operate as a going concern and maintain their enterprise value for the benefit of
stakeholders. Therefore, the Applicants seek a stay under the CCAA to enable them
and the . Partnerships to continue to operate as a going concern and enable them,
together with SSCC, to evaluate restructuring options With the ultiniate . goal of
developing a plan of arrangement Or 'compromise to restructure the business,
5503195 v17
13-6
IL' - SMURFIT-STONE GROUP
Overview of, the Smurfit-StoneGroupand the Applicants
10. SSCG is the ultimate parent company of the Smurfit-Stone Group. SSCC is
formally headquartered in Chicago Illinois and is publicly traded on the Nasdaq
Global Select Market. SSCC is a holding company and has no operations of its own.
Instead, it conducts its business through SSCE. SSCE owns 100% of the Applicant
SSC Canada and the . Applicant Stone' 'ContainerFinance Company of Canada 11
("Stone Finance 11"), together with an indirect 100% interest in the remaining
Applicants and Partnerships. Together, SSC Canada, SSCE, SSCC and their affiliates
(including the Applicants and Partnerships) comprise the Smurfit-Stone Group.
11. The Smurfit-Stone Group's Canadian business is carried on almost entirely
through SSC Canada and Srtturfit-MEI, the latter being a limited parthership formed
under the laws of the Province of Ontario and indirectly owned by SSC Canada
("Smurfit-NISI"). The places of incorporation and businesses, of the Applicants and
Partnerships are summarized below:
SSC Canada
(a) Smurfit-Stone Container, Canada Inc. SSC Canada is a Nova Scotiacorporation with its registered office (but no operations) in Halifax,Nova Scotia that carries on the business of operating two mills (one ofwhich is currently inactive) and a coating facility, as described below.As. at -December 31, 2008, SSC Canada had approximately US$1.15 .billion in assets (book value), including approximately US$248 millionin investments in its subsidiaries and $413 million in goodwill.
$50.1295 v17
-14
Smurfit-MBI
(b) Smurfit MBI. Smurfit-MBI is an Ontario limited partnership, whosegeneral partner is MBI Limited and its limited partners are 3083527Nova Scotia Company ("3083527") and SSC Canada, It is principallyengaged in the design and production of corrugated containers, asdescribed below. As at December 31, 2008, the book value of SmurfitMBI's assets was approximately US$372 million, comprised principallyof current assets, PP&E and goodwill.
(c) AefB1 Limited:' Mt Limited is a New Brunswick company with itsregistered 'office in St: john, New Brunswick. It is 50% owned by3083527 and 50% owned by SSC 'Canada. MBI Limited carries on nobusiness other than acting as Smurfit-MBI's general partner and has noassets other than its interest in Smurfit-MBI.
(d) 3083527 Nova Scotia Company. 3083527 is a Nova Scotia unlimitedliability company with its registered office in Halifax, Nova Scotia.3083527 is wholly owned by 5SC Canada. It does not carry on anybusiness other than acting as one of two of Smurfit-MBI's limitedpartners (the other being SSC Canada) and it has no assets other thanits interest, in Smurfit 4 I, a 50°%o ownership interest in MBI Limited,and some non-material prepayments.
B.C. Shipper 'Supplies and Specialty Containers
(e) B.C. Shipper Supplies Ltd. B.C. Shipper Supplies Ltd. ("B.C. ShipperSupplies"), a B.C. corporation, is a wholly owned subsidiary of 639647British Columbia Ltd. It was engaged in the design and manufacture ofcorrugated products together with the sale of packaging supplies;however, it is no longer active and is in the process of being convertedto a sheet facility.
(f) Specialty Containers Inc. Specialty Containers Inc. ("SpecialtyContainers"), an Alberta corporation, is a wholly owned subsidiary of639647 British Columbia. Ltd. It operated a plant and sales offices inAlberta until substantially all of its assets were sold in 2008.
(g) . 639647 British Columbia Ltd. 639647 British Columbia Ltd., a B.C.corporation, is wholly owned by Smurfit-MBI. It is a holding companyand has no operations and no assets other than 100% of the shares ofB.C. Shipper Supplies Ltd. and Specialty Containers.
Francobec Company
(h) Francobec Company. Francobec Company ("Francobec"), a Nova Scotiaunlimited liability company, is wholly owned by SLP Finance GeneralPartnership ("SLP Finance"). Francobec was the operator of ahardwood chipping facility, but that facility is rtoW inactive.
SLP Finance General Partnership. SLP Finance is a Quebec partnershipowned by two Delaware corporations, SLl' Finance I, Inc. and SLPFinance II, Inc. that are wholly owned subsidiaries of SSCB. SLPFinance owns the shares of 605681 N.B. Inc. ("605681") and Francobec.As at December 31, 2008, SLP Finance had approximately US$574million in investment assets (book value), which arose from the taxstructure of SSCC's acquisition of St. Laurent Pa,erboard, Inc. in 2000.It does not carry on any operations.
(j) 605681.N. B. Inc. 605681 N. B. Inc., a New Brunswick company, is anindirect wholly owned subsidiary of SSCC. It has no tangible assets oroperations, having.distributed its assets in liquidation in December2005:
Stone Finance IY
(k) Stone Container Finance Company of Canada IL Stone Finance II is a NovaScotia corporation that is wholly owned by SSCB. It does not carry onany operations other than having issued a series of 7.375% notes (the"Notes"), as described below, the proceeds of which were remitted toSSC Canada. As at December 31, 2008, Stone Finance II had assets witha book value of approximately $62 million (representing the Class Cshares received as interest in respect of the Notes) compared toliabilities of approximately $207 million (the Notes, plus . accruedinterest).
Unaudited; urifinalized profit and kiss accounts and balance sheets for each of
the Applicants listed above are appended to this my affidavit as Exhibit "B". The
profit and loss accounts and balance sheets for B.C. Shipper Supplies and Specialty
Containers are consolidated as both are currently inactive and are, not tracked
separately. Unaudited, =finalized profit and loss accounts and balance sheets for
each of the Partnerships are appended to this my affidavit as Wait "C".
55N295 v17
169'
13. Two charts showing the corporate structure of the Canadian portion of the
Smurfit-Stone Group, including the Applicants and ' Partnerships, are appended to
this-my affidavit as Exhibit "D"
Bttsiless:of .the.Smt it-Stone.Group
14. The Smurfit-Stone Group operates three principal lines of business:
corrugated containers, containerboard and reclamation. It produces a full range of
corrugated containers designed to protect, ship, store and display products. Its
contairierboard Mills produce a line of containerboard, Which is used priniarilyin the
production of corrugated packaging, largely for its own corrugated container
operations. Finally, its reclamation operations procure fibre resources for its paper
mills as well as other producers.
15. The Smurfit-Stone Group serves a broad customer base. It serves thousands
of, accounts from its plants and sells packaging and other products directly to end
users and converters, as well as through resellers.
16. The Smurfit-Stone Group ha's approximately 21,250 employees, 2,595 of whom
are, employed by the Applicants and Partnerships. It operates 14 paper mills, 122
container plants and 26 reclamation plants in the United States, Canada, Mexico,
China and Puerto Rico. It also owns approximately 1 million acres of timberland in
Canada and operates wood harvestitig facilities in Canada arid the United States.
5503255 v17
-10-
17
17. The Smurfit-Stone Group operates on a centralized and coordinated basis.
Most of the executive head office functions for the entire Smurfit-Stone Group are
carried out from its executive offices in Creve Coeur, Missouri, where senior
management is located, including finance, sales, procurement and cash management.
Containerboard production, marketing and sales are similarly centralized out of the
Smurfit-Stone Group's Container Board Marketing Group in the United States.
Corrugat'edcontainer plaints, however, remain responsible for generating their own
sales with the assistance of regional, divisional or corporate sales staff, depending on
the type of customer.
18. On a consolidated basis, the Smurfit-Stone Group recorded a net loss from
continuing operations of US$103 million on net sales of US$7.4 billion in 2007. For
the nine months ended September 30, 2008, the Smurfit-Stone Group recorded net
income of US$53 million on net sales of US$5.5 billion; however, I understand that
while the results for the fourth quarter have not yet been finalized, they will likely
show a net. loss, due in part to the general economic downturn discussed below.
Copies of SSCC's Annual Report on Form 10-K for the year ended December 31, 2007
and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2008,. as
filed with the United States Securities Commission, are appended to this my affidavit
as Exhibits "E" and "F" respectively,
5503295',17
18-11•
Businessof the Applicantsand Partnerships
19.As indicated above, the Smurfit-Stone Group's Canadian business is carried
on almost entixely through SSC Canada and Smurfit MB1.
20. With the exception of certain shared human resources and "back-office"
functions, SSC Canada and Smurfit-1031 are largely operated separately, as SSC
Canada operates two mills (one of which has been temporarily shut down) and a
coating plant and is part of the containerboard division, while Srnurfit-MBI is a
converting operation that falls within the corrugated container division.
21.
As described above and in further detail below, the operations of the Smurfit-
Stone Group are substantially iritegt'ated as between the United States and Canada.
Substantially all containerboard produced by the SSC Canada mills is sold to the
Sniiirfit.Stone Group's Container Board Marketing Group ("CBMG") and all
containerboard for the Smurfit-MBI corrugated container plants is supplied by the
CBMG. Senior management, reporting and other executive and "back office"
functions are carried on in common by the Smurfit-Stone Group in the United States,
Manager ent of the Centralized Cash Management System. (definedbelow);
(b)
Accounting and finance;
(c) Procurement, logistics and supply-chain management;
(d) Production planning and management;
19-52-.
Research and development;
Marketing and communications;
Legal and tax; and
Information technology.
22. Without a significant iiivestirtent of time and money,. I do not believe that SSC
Canada could operate on a stand-alone basis.
SSC Canada
Mills
23. SSC Canada directly operates mills and plants producing linerboard (a
component of corrugated confainerboard), corrugating medium (a component of
corrugated containerboard) and foodbaard (coated corrugated cardboard).. The mills
and plants do not produce corrugated containers.
24. As part of the Smurfit-Stone Group's ongoing restructuring, SSC Canada has
closed the majority of its mills, some of which have been sold, such that SSC Canada
has only one remaining mill that is currently active, the Quebec La Tuque mill, and
one Mill that is temporarily shut down in Matane, Quebec (together, the "Canadian
SSC Mills") and a coating facility in Montreal. It also leases office space in Montreal
and owns a corrugated container facility in Burlington, Ontario, that is' used in
connection with the Smurfit-MBI business described below. SSC Canada employed '
928 salaried and hourly employees (including those on paid and unpaid leave and
part=time employees) as at. the end of 2008. Preliminary indications are that SSC
(e)
(f)
(g)
(h)
20-13-
Canada will record a loss before taxes of at least US$45 million for 2008, as shown on
Exhibit B hereto.
25. In addition to the facilities described above; SSC Canada continues to own
three additional mill properties in New Brunswick and Quebec that have been
closed. Discussions are ongoing with respect to the sale of those properties.
26. The Canadian SSC Mills are integrated into the Smurfit-Stone Group's
containerboard division. Canada is considered to be a region of the Smurfit-Stone
Group's U.S. operations for production and reporting purpose.
27. The Canadian SSC Mills have no material sales outside of the Smurfit-Stone
Group. All production from the Canadian SSC Mills is directed from the Smurfit-
Stone Group's Chicago office, where the CBMG is located, Indeed, the Canadian SSC
Mills do not have the ability to take and process orders other than through the
CBMG. The CBMG receives all internal and external orders for containerboatd and
uses computer programs to automatically assign production to its various nulls and
plants, including those in Canada, based upon proximity, capacity and other factors
and without reference to the fact that the Canadian SSC Mills are owned by a distinct
Canadian legal entity.
28. The Canadian SSC Mills and the coating facility have the ability to place .
orders directly • with suppliers and 'tO ritake arrarigements with transport companies,
as necessary. However, in many cases, those suppliers and transport companies are
9903195 v17
21-14-
selected, and umbrella contracts negotiated, by the Smurfit Stone Group in the
United States in order to achieve economies of scale. Furthermore, almost. all
supplier invoices are . submitted to the U.S. headquarters for payment directly to
suppliers; even lease payments owing on the Canadian facilities and accounts
payable for office supplies or legal bills are sent to the Smurfit-Stone Group's office
in Creve Couer for payment. Only a very small amount of Petty cash is maintained .
on-hand. In short, almost all receivables and payablesrelating to the Canadian SSC
Mills are managed directly by the Smurfit-Stone Group in the United States:
29. The operation of the Canadian SSC Mills and the coating facility is dependent
on the continued supply of a number of products, including wood, chemicals, fuel
and energy - many of which are supplied pursuant to umbrella contracts negotiated
in the United States. The Canadian SSC Mills' business is also reliant on rail and
trucking services to transport their products to the Srriurfit-Stone Group's corrugated
container . : facilities. While a significant portion of the Canadian SSC Mills'
production is directed to Smurfit-MBI, shipments into the United States, and the
receipt of supplies imported from the United States, are dependent on the services of
a customs broker. In order to ensure the ordinary flow of materials, the Applicants
and Partnerships are proposing to pay their transportation'artd logistics providers,
custom brokers and other supply chant providers for costs incurred before and after
ie tohin't rtcenient of these proceedings: as may be necessary to obtain the release of
goods contracted for.
l5031% v17
22-15-
Timberland
30. In addition to the mills and plants described above, SSC Canada also owns
approximately 960,000 acres of timberland in Quebec, as described below under
"Properties". SSC Canada has reviewed the possible sale of those lands and
discussions are ongoing.
-1eddiiuaitsts
31. SSC Canada maintains an office in a leased office facility in Montreal
(although Smurfit-MBI has a separate head office in Mississauga, as described
below). Certain regional operational, logistical, legal, communications and human
resource functions relating to the Canadian SSC Mills and Smurfit-Ian including
payroll, benefits, pensions and `government relations, are directed from the Montreal
offic'e, although the majdrity of the back office, executive and other functions are
performed in the United States, as described above.
Smurfit-MBI
32. Smurfit-NISI is a converting operation that is considared to be part of the
corrugated containers division of the Sniurit-Stone Group.. It is the second largest
.paper packagitig.:busins in `Canada: 8mtiifit-MBI designs and manufactures
corrugated containers using, amongst other things, containerboard from the Smurfit-
Stone Group's mills. Smurfit-MST's corrugated containers are used for product
... 71. 84. GEL'12exdale, Ontario ,._ 1 1 2Richmond, B. C. 29, ..
_. 0
_:
... , 29St Lamont, 'Quebec .. .: 56 ,
_..x..,141 197 GPP'1'opJnto, Ontario; . ,
, , 26
:. .:.:
70.: 96 .Ville Mont-17oyal, Quebec 11..
..
. 115 126 CEPWhitby,. Ontario ...
2 2
.. 4Winnipeg, Manitoba 41 121 162 IWA
82.
In addition to the foregoing, B.C. Shipper Supplies continues to employ 11
salaried employees in Delta, British Columbia.
Almost all of . the active plants and mills are Unionized by one . of
Coiimiurdcatidns, Energy and Paperworkers Union. of Canada ("CEP"); Industrial,
Wood and Allied Workers of Canada ("IWA"); Independent Paperworkers of
Canada ("IPC"); or Pulp Paper and Woodworkers of Canada ("PPWC"), as shown
5503195 v17
39-32.
above. Those contracts expire at various times between 2009 and 2013. The PPWC
B.C. Shipper Supplies contract expired at the end of 2008,
84. SSC Canada's gross payroll obligation (salaried and hourly) for fiscal 2008 was
approximately $58 million; and Smurfit-MBl's aggregate gross payroll obligation
(salaried and hourly) for the same period was approximately $118 million.
$5.. Approximately CON I$13.8 million in salary is expected to become payable in
January 2009, of which CDN$5.4 million is yet to be paid.
86. SSC Canada and Smurfit-MBI also offer benefits to their eligible salaried and
hourly employees, including through group insurance programs. The total amounts
paid by, SSC Canada for benefits for hourly and salaried employees during 2008
totalled approximately $10.6 million, While hourly and salaried benefits at Smurfit-
87. SSC Canada and Smurfit-MBI provide vacation time to their Employees as a
paid time-off benefit. The duration of vacation benefits varies based on the
employee's location, position, amount of time employed and may be governed by
collective bargaining agreements, where applicable.. The estinttated amount of
accrued unused vacation time at the end of .2008 was approximately $8.5 million
(accrued vacation) and $0.1 million (statutory holiday pay)..
-33-
40
88. SSCC and Smurfit-MBI maintain six defined benefit registered pension plans
for their unionized and non unionized Canadian employees (together, the "Defined
Benefit Plans"), as follows:
(a) Pension Plan for Non-Unionized Employees of Smurfit-MBI (Ontarioand Canada Revenue Agency No.: 0981324) ("Non-Unionized Smurfit-MBI Plan"); :.
(b) Retirement Plan for Employees of Smurfit-Stone Container Canada Inc.(Quebec Registration-No.: 31658; Canada Revenue Agency Registration .No.: 1041904) ("SSC Canada Plan");
(c) Pension Plan for Designated Executive Employees of Smurfit-MBI(Ontario and Canada Revenue Agency Registration No.: 0983015)("Executive Plan");
(d) Pension Plan for Unionized Employees of Srnurfit-lvMBl, (Ontario andCanada Revenue Agency Registration No.: 0902312)' (UnionizedSmurfit-MB! Plan");
Regime , ' de retraife des employes syndiques d'Ernballages Smurfit-Stone Canada Inc Divisions La Tuque, Matane, Pointe-aux-Trembles etBurlington (Quebec Registration No.: 31388; Canada Revenue AgencyRegistration No,: 1010180) ("Mill Plan"); and
(f)
Pension Plan for Forest & Sawmill Employees of Stone Container(Canada) (New Brunswick and Canada Revenue Agency Registration
. No. 1041912) ("Forest and Sawmill Plan");
89.. Effective February 28, 2009, defined benefit accruals in the Non-Unionized
accruals. Benefit accruals in the Executive Plan and in the Forest and Sawmill Plan
ceased a number of years ago.
Smurfit-M' 1: Plan . and SSC Canada Plane are scheduled o eea`se .puisuant to a
previously announced plan redesign. They will be replaced by defined contribution
-34-
41
90. The actuary for the Defined Benefit Plans is Mercer (Canada) Ltd. ("Mercer").
As at December 31, 2007, the Defined Benefit Plans had approximately 2,800 active
members; 575 deferred vested members (i.e., former employees whose benefits have
vested but who are not yet receiving paymei ts); and 3,950 retired members..
However, . as a result of certain recent plant closures, the aggregate active
membership has fallen to approximately 2,350.
91. In addition to the Defined Benefit Plans, B.C. Shipper Supplies maintains the
Pension Plan for Employees of B.C. Shipper Supplies Ltd. (the "BC Shipper Supplies
Plan"), a. defined contribution registered pension plan. The BC Shipper Supplies
Plan has 42 ineinbers.
92, Finally, the unionized employees of Smurfit-MB1 at New Westminster, B.C.
participate in the Pulp and Paper Industry Pension Plan, a multi-employer registered
pension plan (the "Pulp and Paper Plan").
93. As at December 31, 2007, the aggregate market value of the assets in the
Defined Benefit Plans was approximately.. $862 million (net of estimated plan
termination expenses totalling $3.3 million), with a total solvency deficiency of
approximately $132 million. Also as at December 31, 2007, the estimated aggregate
annual employer current service cost for 2008 (total current service cost less
estimated members' required contributions) for the Defined Benefit Plans WAS
approximately $10.4 million. In addition, special payments associated with
liquidatiztg a solvency deficiency must be amortized over a fixed period with interest
S503295v17
-35-
42
accumulating on the sum and remittances being made monthly, in equal instalments,
from the date of the report that discloses the liability. Based on information and data
available. as at, : Dec'etnber 31, 2007, the solvency deficiency / excess, estimated
employer service current contributions and special payments for 2008 for each of the
Defined Benefit Plans were determined by Mercer as shown below:
Plan-
::
' :....
SolvencyExcess(Deficiency)
EstimatedCompanyCurrent ServiceCosa(Per YeaiJ ..
..
SpecialPayments
toAmortizeDeficits(Per Year)
NonUnionized Smurfit-NW Plan ($13;375;000) $3,261,000 $4;913,000
SSC Canada Plan ($52,702,000) $2,903,000 $22,287,000
Executive Plan ($137,000) $20,000 $116,100
Unionized Smurfit=MB1 Plan ($26,547,000)
. $2,461,400 $10,307,800
Mill Plan ($39,672,000) $1,786,000 $12,109,000
Forest and Sawmill Plan $30;000 N/A N/A
TOTAL ($132,403,000) $10,432,400 $49,732,900
The $49.7 million total ±eflected in the. above table represents the special
payments that would have had to be remitted for 2008 had all the Defined Benefit
Plans been subject to a requirement to file actuarial valuations as at December 31,
2007. In fact, however, there was no such requirement in, most cases, and so. the
actual aggregate special payMents made to all . ' the Defined Benefit Plans for 2008 was
$41.7Million. '.Similarly, the ' actual employer current service contributions made to
all the Defined Benefit Plans for 2008 was $9.6 million. Mercer anticipates that
5503795 v17
43
contribution levels for 2009 would be roughly $55 million to $60 million (including
both current service contributions and special payments) assuming that, in
accordance with minimum legislative requirements, a complete actuarial valuation
as at December 31, 2008 is filed only for the Smurfit-MBI Unionized Plan, and that
contributions to the remaining plans in 2009 continue to be determined on the basis
of the last complete actuarial Valuations filets. These e5tiinated contributions also take
into account that interim actuarial cost certificates will be filed in 2009 for certain
plans ,in respect of collectively bargained benefit changes and other upcoming plan
changes announced previously, It should be noted that, without taking into account
pending changes to legislation, required contributions for 2009 would be greater if
complete actuarial valuations were to be required for other plans.
Defined Benefit Plans during. the stay period but will continue to make current
service contributions to such plans, and will also make contributions to all defined
contribution and multi-employer plans.
(a) Senior Management Retirement Plan, with 51 members. The totalbenefit obligation as at January 1, 2009 was $14,374,000. The totalbenefit cost for 2008 was $874,000.
5503295 V17
95. The Applicants and Partnerships intend to suspend the remittance of special
payrneitts; in respect of past service for "all current and former employees to the
96.
Tlie Applicarits and Partnetsliips also :.i'naintain four; xtdP-registered pension .
plans: Based on inforrnation provided by Mercer, they are described as follows:
-37-
4
(b) Smurfit-MBI Senior Management Retirement Plan (the "SMB1 Plan"),with 6 members. The total benefit obligation as at January 1, 2009 wasapproximately $8 million. The total benefit cost for 2008 was $425,000.
(c) Supplementary Employee Retirement Plan for Certain EligibleExecutives of Smurfit-Stone Container Canada Inc. and theSupplementary Pension Plan for Eligible Senior Managers of Smurfit-Stone Container Canada Inc. (the "Executive Plans"), with 17 members.The total benefit obligation as at January 1, 2009 was $17,596,000. Thetotal benefit cost for 2008 was $1,091,000..
(d). Directors Pension Plan, with .8 retired Members. The total benefitobligation as at January _1, 2009 was $640,000.
97. The obligations under the SMBl Plan and obligations for certain members of
the Executive Plans are secured by letters of credit, which are in the face amounts of
$12,663,900 and $19,787,800, respectively.
98. SSC Canada also maintains a group registered retirement savings plan and a
deferred profit sharing. plan for SSC Canada and Smurfit-MBI employees: the Group
Retirement Savings Plan for Smurfit-Stone Container Canada Inc. and Smurfit-MET
and the Deferred Profit Sharing Plan for Smurfit-Stone Container Canada Inc. and
Smurfit-MBI. Varying contributions are made to the savings plans, which are
indexed to employee contributions.
99. SSC 'Canada maintains a nonunion post-retirement benefits plan that offers:
life insurance and medical and dental benefits, as well two union post-retirement
benefits plans that offer life insurance. Similarly, Smurfit-MBI offers non-union and
union post-retirement benefit plans that offer life insurance, and medical benefits.
The total cost to maintain these plans was approximately $3 million in 2008. These
s5 iz V37
45
-$8-
plans are unfunded and the aggregate accrued post-retirement benefit obligation was
approximately $57.8 million in 2008.
Litigation
100. 1 aril riot aware Of any material outstanding litigation involving the Applicants
or . the Partnerships. The Most significant dispute is with Canadian National Railway
regarding outstanding invoices and demurrage fees (penalties associated. with
retaining rail cars). The amount claimed by CN is less than $400,000 and the matter
is. proceeding to arbitration.
101: The Applicants and Partnerships are subject to numerous federal and
provincial laws pertaining to environmental matters. Compliance with. those laws
and regulations generally requires operating costs as well as capital expenditures.
102. During the closing of a mill, SSC Canada establishes a reserve to cover the
estimated environmental reinediation, costs, associated with. closure, and. that
rerriediation is carried out in coordination with local and provincial authorities. The
reserves relating to the New Richmond, Bathurst and Pontiac facilities are not
material as compared to SSC Canada's assets and operations..
46
IV. CAUSES OF INSOLVENCY AND RECENT EVENTS
SSCC BankruptcyProceedings
103:., As noted above, early on January 26, 2009, SSCC and those of its direct and .
indirect wholly-owned subsidiaries and partnerships listed on Schedule "C" (the
"US Debtors"), together with the Applicants and Partnerships, will make the US
Bankruptcy Filing (the "US Bankruptcy Proceedings").
104. In, the US Bankruptcy Proceedings, SSCC intends to file motions seeking,
amongst other relief: (a) joint adtt'uriistration of the Chapter. 11. cases; (b) an order
-enforcing the U.S. Bankruptcy Code 's automatic stay; (c) approval of DIP Financing;
(d) direction as to their ongoing business operations, including the payment of
certain employee obligations and continued use of the cash management system; (e)
direction as to the payment of certainprepetition claims; and (f) retention of a Notice,
Claims and , Solicitation. Agent. The Illations are expected to be heard on Tuesday,
105. The US Debtors made the US Bankruptcy Filing as a result of challenging
industry conditions, primarily an unanticipated decline in demand the for the
Smurfit-Stone Group's products as a result of the recent downturn in the global
economy coupled with volatility in energy prices and the cost of raw materials,
Concurrently, substantial price competition and 'volatility in the ;pulp and paper
industry resulted in decreased prices for the $mitrfit-Stone Gr'oup's products which,
X39-
ss03a9s Y17
47,'-40-
coupled with the Smurfit-Stone Croup's highly leveraged financial position, have
adversely impacted the Smurfit-Stone Group's financial performance.
106, In addition, the recent and dramatic changes in the capital markets have
negatively affected the Smurfit-Stone Group's prospects for refinancing or extension
of its revolving credit and securitization facilities. Due to these factors, the US
Debtors have found it necessary to make the US Bankruptcy Piling in order to
restrueture their balance sheets while addressing- their immediate liquidity needs.
107'. The businesses of the US Debtors and the Applicants are linked in such a
manner that the US Bankruptcy Filing has immediate rathifications for the
Applicants.
108. ' As set out above, SSCE and SSC Canada are borrowers under the same Pre-
Piling Credit Agreement The US Bankniptcy Piling constitutes an event of default
tinder the Pre-Filing Credit Agreement that will immediately accelerate the
approximately US$367 million owing by SSC Canada under that facility. As
described above, the obligations of SSC Canada under the Pre-Filing Credit
Agreement are secured by substantially all the Canadian assets. Without the benefit
of the Pre-Filing Credit Agreement Or the CCAA stay of proceedings, the Applicants
will be unable to continue operating their business.
109. In 'addition, the U'S Bankruptcy Filing will constitute a Termination Event
under the Receivables Agreement. As described above, the Termination Event will
5503295 vll
8
trigger the Facility Terration Date, precluding Smurfit-MBI from collecting on
approximately CDN$ 38 million in outstanding receivables.
110. Without the Pre-Filing Credit Agreement and the DIP Facility described
herein, the Applicants and Partnerships would have no access to any credit. and
would not have sufficient cbt ' itted capital to meet their operating needs or,
financial obligations in the normal course. As shown in' the cash flow forecast
discussed below, estimated cash on hand at January 23, 2009 was CDN$704,517,
whereas the accounts payable balance is estimated to be in excess of CDN$53 million
and the forecast shows a significant net outflow of cash in the next thirty days. At
the same time, given the US Bankruptcy Filing, the intercompany balance described
above will not be'collectable. .
: DIRECTORS' AND OFFICERS' PROTECTION
111. A successful restructuring of the Applicants will only be possible with the
continued participation of the Applicants' boards of directors (the "Smurfit Canada
Directors"), management and employees. These personnel are essential to the
viability of the Applicants' continuing business.
112..: I an advised by Marvin Yoiitef of. Stiketnan Elliott I.,LP, counsel for SSC
Canada, and I believe that, in certain circumstances, directors can be held liable for
certain obligations of a company owing to employees and government entities. SSC
Canada estimates, with the assistance of its financial advisor, that these obligations
may include unpaid accrued wages, unpaid accrued vacation pay, unpaid sales and
49
million as at December 31, 2008.
113. It is my understanding that the Smurfit Canada Directors are currently among
Many potential beneficiaries under an umbrella liability insurance policy that covers .
both ,the United States and Canadian entities and their directors and officers.
However; the Smurfit Canada Directors have indicated that their continued service
and involvement in this restructuring is conditional upon the granting of an Order
under the CCAA which grants a charge in favour of the directors and officers of the
Applicants in the amount of US$8.6 million on the property of the Applicants and the
Partnerships (the "Directors' Charge"). A portion of the Directors' Charge would
stand in priority to the DIP Facility, as described below.
VI. POT-FILING FINANCING
114. The Applicants and Partnerships anticipate that they will require
approximately $50 million in DIP financing (including approximately $31 million
being used to refinance the receivables facility) during the initial 30 day stay period.
Appended to this my affidavit as Thdiibit "I" is a cash flow forecast prepared for the
five-week period from January 26, 2009 to February 27, 2009. As described above,
SSC Canada and Smurfit-lv1BI are managed as part of the Smurfit-Stone Group,
which has not historically prepared cash flow forecasts. As a result, there are likely
to be some variations between the forecast and actual cash flows during the five-
service taxes and certain pension amounts that amounted to approximately $14
-43-
J0
week period covered by the cash flow forecast due to the fact that SSC Canada is
forecasting cash flows for the first time.
115. The DIP lenders are only willing to extend credit to the Applicants under the
DIP Facility. Given current tight market conditions, it was difficult to obtain a "new
money" DIP of the required order of magnitude and there can be no assurance that
the Applicants and Partnerships could obtain alternative financing on any terms.
The DIP Facility will be available to finanee the Applicants and Partnerships'
working capital requirements, general corporate purposes; permitted capital
expenditures and the refinancing of the receivables securitization program. Without
the DIP Facility, the Applicants will be unable to continue going concern operations
and likely will be forced into an immediate and uncontrolled liquidation of their
assets.
116. The DIP Facility provides for MaxiMum cen-anittnerits as follows:
(a) a"US Revolving Facility" in an aggregate principal amount of US$250million that will be made available to SSCE in US dollars or SSCCanada in US dollars;
(b) A "Canadian Revolving Facility" of US$65 million that will be madeavailable to SSC Canada in US dollars and Canadian dollars or to SSCEin US dollars;
(c) A "US Term Loan" of US$400 million made available to SSCE in USdollars;
(d) A "Canadian Term Loan" of US$35 million made available to SSCCanada in US dollars;
950329$ v17
-44-
117: Borrowings by SSCE under the DIP Facility are guaranteed by the US Debtors
other than SMBI Inc. and SSC Canada, and secured by a security interest on
substantially all of their assets. Borrowings by SSC Canada are guaranteed by the US
Debtors, the Applicants other than SSC Canada and the Partnerships and are secured
by the assets of the Applicants and Partnerships. The security interest extends, as
applicable, to the Applicants' and Partnerships' inventory, accounts, equipment,
intangibles, deposit accounts, investment. property and real estate... The amount
borrowed under the DIP.Facilitywill be secured by inter alia, a court-ordered charge
on the Applicants` property (the "DTP Charge") ranking in priority to all other liens,
charges and security interests, but subordinate to the Directors' Charge and a portion
of the Administration Charge. Thus, the relative priorities of the charges proposed to
be created by the Initial Order are as follows:
Administration Charge (to the extent of $1 million);:
(b) Directors' Charge (to the extent of $8.6 million);
(c) DTP Charge; and
(d) Administration Charge (for any amount greater than $1 million, to amaximum of $5 million).
118. While the DIP Charge will rank in priority to the Pre-Filing Credit Agreement
security, it is proposed to pay interest and fees (not principal) to the. Pre-Filing Credit
Agreement lenders:
119 ' Based on discussions' with the Applicants' financial advisor,
PricewaterhouseCoopers Inc., it is anticipated that the proposed DIP" Facility Will
5503295 v17
accommodate the Applicants' and Partnership's' liquidity requirements during, the
requested stay period.
VII. PROPOSED PLAN
120. The Applicants anticipate that their highest value lies with remaining a part of
the integrated Smurfit-Stone Group, There would be significant costs and risks
entailed by attempting to separate the Applicants and Partnerships tram the Smurfit -
Stone Group. Accordingly, working with the Smurfit-Stone Group, the Applicants
and Partnerships expect that a viable restructuring plan can be put together
incorporating some of the following elements:
(a)
Continuing the process of selling and realizing value in respect ofclOged and discontintied'ciperatiOns"; and
Cciordinating with the Srhiarfit-Stone Group in the US BankruptcyProceedings to achieve a balance sheet restructuring which willsubstantially de-lever the Smurfit-Stone Gro'up and better position it tocompete.
VIII. MONITOR
121. Deloitte has consented to act as the Court-appointed Monitor of the Applicant,
subject to Cburt approval.
SWOM BEPORE ME at the City ofIviontreal, on. January 25, 2009.
Commissioner for Taking Affidavits
o)n.n in44
5 3
SCHEDULE "A"
Smurfit-Stone Container Canada Inc.
605681 N. B. Inc.
Francobec Company
Stone Container Finance Company of Canada II
3083527 Nova Scotia Company
MBI.Limited/Limitee
639647 British Columbia Ltd.
B.C. Shipper: Supplies Ltd.
Specialty Containers Inc..
54-47-
SCHEDULE "B"
Smurf t-NISI.
SLT':Finan.ce General Partnership
5503295 y17
55-48-
SCHEDULE "C"
Smurfit-Stone Container Corporation
Smurfit-Stone Container Enterprises, Inc.
Lot 2417 Redevelopment Corporation
Atlanta & St. Andrews Bay Railroad Co.
Cameo Container Corporation
Stone International Services Corporation
Calpine Corrugated LLC
Stone Global., Int.
Stone Connecticut. Paperboard Properties, Inc.
Smurfit-Stone Puerto Rico, Inc.
Smurfit Newsprint Corporation
SLP Finance I, Inc.
SLP Finance U, Inc.
SNIBI Inc.
5503273 ♦17
TAB C
This is Exhibit "C" referred to in the Affidavit ofDean Jones
solemnly declared before me in Montrealthis 21 st day of September, 2009
^^Ce rasse%
ley
Apr
L Pascale Lemelin% # 166449
Commissioner of Oaths for all of thedistricts of the province of Quebec
°'p,e^,'0
020
Court File No. CV-09-7966-OOCL
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
))
THE HONOURABLE
JUSTICE PEPALI.,
MONDAY, THE 26th
DAY OF JANUARY, 2009
IN THE MATTER OF THE COMPANIES' CREDITORSARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF THE BANKRUPTCY ANDINSOLVENCY ACT, R.S.C. 1985, c. B-3, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE ORARRANGEMENT OF SMURFIT-STONE CONTAINERCANADA INC. AND THE OTHER APPLICANTS LISTEDON SCHEDULE "A"
Applicants
AMENDED AND RESTATED INITIAL ORDER
THIS APPLICATION, made by the Applicants, pursuant to the Companies'
Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the "CCAA") was heard this
day at 330 University Avenue, Toronto, Ontario.
ON READING the affidavit of Dean Jones sworn January 25, 2009 (the "Jones
Affidavit") and the Exhibits thereto, the first report of Deloitte and Touche Inc.
("Deloitte") in its capacity as proposed monitor for the Applicants and on hearing the
submissions of counsel for the Applicants, the DIP Agent (as defined below) and on
reading the consent of Deloitte to act as the Monitor,
v
1-2
SERVICE
1. THIS COURT ORDERS that the time for service of the Notice of Application
and the Application Record is hereby abridged so that this Application is properly
returnable today and hereby dispenses with further service thereof.
APPLICATION
2. THIS COURT ORDERS AND DECLARES that the Applicants are companies to
which the CCAA applies. Although not Applicants, those partnerships listed on
Schedule "B" (the "Partnerships") shall enjoy the benefits of the protections provided
by this Order.
PLAN OF ARRANGEMENT
3. THIS COURT ORDERS that the Applicants shall have the authority to file and
may, subject to further order of this Court, file with this Court a plan of compromise or
arrangement (hereinafter referred to as the "Plan") between, inter alia, the Applicants
and one or more classes of their secured and/or unsecured creditors as they deem
appropriate.
POSSESSION OF PROPERTY AND OPERATIONS
4. THIS COURT ORDERS that the Applicants and Partnerships shall remain in
possession and control of their current and future assets, undertakings and properties
of every nature and kind whatsoever, and wherever situate including all proceeds
thereof (the "Property"). Subject to further Order of this Court, the Applicants and
Partnerships shall continue to carry on business in a manner consistent with the
preservation of their business (the "Business") and Property. The Applicants and
Partnerships shall be authorized and empowered to continue to retain and employ the
employees, consultants, agents, experts, accountants, counsel and such other persons
(collectively "Assistants") currently retained or employed by them, with liberty to retain
3
such further Assistants as they deem reasonably necessary or desirable in the ordinary
course of business or for the carrying out of the terms of this Order.
5. THIS COURT ORDERS that the Applicants and Partnerships shall be entitled to
continue to utilize the centralized cash management systems currently in place as
described in the Jones Affidavit or replace them with other substantially similar central
cash management system(s) (together, the "Cash Management System") and that any
present or future bank providing the Cash Management System shall not be under any
obligation whatsoever to inquire into the propriety, validity or legality of any transfer,
payment, collection or other action taken under the Cash Management System, or as to
the use or application by the Applicants or Partnerships of funds transferred, paid,
collected or otherwise dealt with in the Cash Management System, shall be entitled to
provide the Cash Management System without any liability in respect thereof to any
Person (as hereinafter defined) other than the Applicants and Partnerships, pursuant to
the terms of the documentation applicable to the Cash Management System, and shall
be, in its capacity as provider of the Cash Management System, an unaffected creditor
under the Plan with regard to any claims or expenses it may suffer or incur in
connection with the provision of the Cash Management System. The Monitor shall
review and monitor the Cash Management System and report to this Court from time to
time.
6. THIS COURT ORDERS that the Applicants and Partnerships shall be entitled
but not required to pay the following expenses whether incurred prior to or after this
Order:
(a) all outstanding and future wages, salaries, employee and pension benefits
and contributions, vacation pay, bonuses and expenses payable on or after
the date of this Order, in each case incurred in the ordinary course of business
and consistent with existing compensation policies and arrangements;
4-
(b) the fees and disbursements of any Assistants retained or employed by the
Applicants and Partnerships in respect of these proceedings, at their standard
rates and charges; and
(c) amounts owing for goods and services actually supplied to the Applicants
and Partnerships, or to obtain the release of goods contracted for, prior to the
date of this order:
(i) by railways, trucking companies and other carriers and customsbrokers, with the consent of the Monitor and the DIP Agent; and
(ii) with the consent of the Monitor and the DIP Agent, up to US$11.6million by other suppliers if, in the opinion of the Applicants andPartnerships, the supplier is critical to the Business and ongoingoperations of the Applicants and/ or Partnerships.
7. THIS COURT ORDERS that, except as otherwise provided to the contrary
herein, the Applicants and Partnerships shall be entitled but not required to pay all
reasonable expenses incurred by them in carrying on the Business in the ordinary
course from and after the date of this Order, and in carrying out the provisions of this
Order, which expenses shall include, without limitation:
(a) all expenses and capital expenditures reasonably necessary for the
preservation of the Property or the Business including, without limitation,
payments on account of insurance (including directors and officers
insurance), maintenance and security services; and
(b) payment for goods or services actually supplied to the Applicants and
Partnerships following the date of this Order.
8.
THIS COURT ORDERS that the Applicants and Partnerships shall remit, in
accordance with legal requirements, or pay:
(a)
any statutory deemed trust amounts in favour of the Crown in right of
Canada or of any Province thereof or any other taxation authority which are
5
required to be deducted from employees' wages, including, without
limitation, amounts in respect of (i) employment insurance, (ii) Canada
Pension Plan, (iii) Quebec Pension Plan, and (iv) income taxes;
(b) all goods and services or other applicable sales taxes (collectively, "Sales
Taxes") required to be remitted by the Applicants and Partnerships in
connection with the sale of goods and services by the Applicants and
Partnerships, but only where such Sales Taxes are accrued or collected after
the date of this Order, or where such Sales Taxes were accrued or collected
prior to the date of this Order but not required to be remitted until on or after
the date of this Order, and
(c) any amount payable to the Crown in right of Canada or of any Province
thereof or any political subdivision thereof or any other taxation authority in
respect of municipal realty, municipal business or other taxes, assessments or
levies of any nature or kind which are entitled at law to be paid in priority to
claims of secured creditors and which are attributable to or in respect of the
carrying on of the Business by the Applicants and Partnerships.
9. THIS COURT ORDERS that until such time as an Applicant or Partnership
delivers a notice in writing to repudiate a real property lease in accordance with
paragraph 11(c) of this Order (a "Notice of Repudiation"), the Applicants and
Partnerships shall pay all amounts constituting rent or payable as rent under real
property leases (including, for greater certainty, common area maintenance charges,
utilities and realty taxes and any other amounts payable to the landlord under the lease)
or as otherwise may be negotiated between the Applicants and Partnerships and the
relevant landlords from time to time ("Rent"), for the period commencing from and
including the date of this Order, twice-monthly in equal payments on the first and
fifteenth day of each month, in advance (but not in arrears). On the date of the first of
such payments, any arrears relating to the period commencing from and including the
625
date of this Order shall also be paid. Upon delivery of a Notice of Repudiation, the
relevant Applicant or Partnership shall pay all Rent due for the notice period stipulated
in paragraph 11(c) of this Order, to the extent that Rent for such period has not already
been paid.
10. THIS COURT ORDERS that, except as specifically permitted herein or in the
DIP Documents (as defined below), the Applicants and Partnerships are hereby
directed, until further Order of this Court: (a) to make no payments of principal, interest
thereon or otherwise on account of amounts owing by the Applicants or Partnerships to
any of their creditors as of this date; (b) to grant no security interests, trust, liens,
charges or encumbrances upon or in respect of any of the Property; and (c) to not grant
credit or incur liabilities except in the ordinary course of the Business.
RESTRUCTURING
11. THIS COURT ORDERS that the Applicants and Partnerships shall, subject to
such covenants as may be contained in the DIP Documents, have the right to:
(a) permanently or temporarily cease, downsize or shut down any of their
business or operations and to dispose of redundant or non-material assets not
exceeding $2 million in any one transaction or $25 million in the aggregate,
subject to paragraph 11(c), if applicable;
(b) terminate the employment of such of their employees or temporarily lay off
such of their employees as the relevant Applicant or Partnership deems
appropriate on such terms as may be agreed upon between the relevant
Applicant or Partnership and such employee, or failing such agreement, to
deal with the consequences thereof in the Plan;
(c) in accordance with paragraphs 12 and 13, vacate, abandon or quit the whole
but not part of any leased premises and/or repudiate any real property lease
and any ancillary agreements relating to any leased premises, on not less than
7
fourteen (14) days notice in writing to the relevant landlord on such terms as
may be agreed upon between the relevant Applicant or Partnership and such
landlord, or failing such agreement, to deal with the consequences thereof in
the Plan;
(d) repudiate such of their arrangements or agreements of any nature
whatsoever, whether oral or written, as the Applicants or Partnerships deem
appropriate on such terms as may be agreed upon between the relevant
Applicant or Partnership and such counter-parties, or failing such agreement,
to deal with the consequences thereof in the Plan; and
(e) pursue all avenues of refinancing and offers for material parts of the Business
or Property, in whole or part, subject to prior approval of this Court being
obtained before any material refinancing or any sale (except as permitted by
subparagraph (a), above),
all of the foregoing to permit the Applicants and Partnerships to proceed with an
orderly restructuring of the Business (the "Restructuring").
12. THIS COURT ORDERS that the Applicants and Partnerships shall provide each
of the relevant landlords with notice of the relevant Applicant's or Partnership's
intention to remove any fixtures from any leased premises at least seven (7) days prior
to the date of the intended removal. The relevant landlord shall be entitled to have a
representative present in the leased premises to observe such removal and, if the
landlord disputes the Applicant ' s or Partnership's entitlement to remove any such
fixture under the provisions of the lease, such fixture shall remain on the premises and
shall be dealt with as agreed between any applicable secured creditors, such landlord
and the relevant Applicant or Partnership, or by further Order of this Court upon
application by the relevant Applicant or Partnership on at least two (2) days notice to
such landlord and any such secured creditors. If an Applicant or Partnership repudiates
the lease governing such leased premises in accordance with paragraph 11(c) of this
8
Order, it shall not be required to pay Rent under such lease pending resolution of any
such dispute (other than Rent payable for the notice period provided for in paragraph
11(c) of this Order), and the repudiation of the lease shall be without prejudice to the
Applicant's claim to the fixtures in dispute.
13. THIS COURT ORDERS that if a Notice of Repudiation is delivered, then (a)
during the notice period prior to the effective time of the repudiation, the landlord may
show the affected leased premises to prospective tenants during normal business hours,
on giving the relevant Applicant or Partnership and the Monitor 24 hours' prior written
notice, and (b) at the effective time of the repudiation, the relevant landlord shall be
entitled to take possession of any such leased premises without waiver of or prejudice
to any claims or rights such landlord may have against the Applicant or Partnership in
respect of such lease or leased premises and such landlord shall be entitled to notify the
Applicant or Partnership of the basis on which it is taking possession and to gain
possession of and re-lease such leased premises to any third party or parties on such
terms as such landlord considers advisable, provided that nothing herein shall relieve
such landlord of its obligation to mitigate any damages claimed in connection
therewith.
NO PROCEEDINGS AGAINST THE APPLICANTS OR PARTNERSHIPS OR THEPROPERTY
14. THIS COURT ORDERS that until and including February 25, 2009, or such later
date as this Court may order (the "Stay Period"), no proceeding or enforcement process
in any court or tribunal (each, a "Proceeding") shall be commenced or continued against
or in respect of the Applicants, the Partnerships or the Monitor, or affecting the
Business or the Property, except with the written consent of the applicable Applicant or
Partnership, the DIP Agent and the Monitor, or with leave of this Court, and any and all
Proceedings currently under way against or in respect of the Applicants, the
Partnerships or affecting the Business or the Property are hereby stayed and suspended
pending further Order of this Court.
4) 8
-9-
NO EXERCISE OF RIGHTS OR REMEDIES
15. THIS COURT ORDERS that during the Stay Period, all rights and remedies of
any individual, firm, corporation, governmental body or agency, or any other entities
(all of the foregoing, collectively being "Persons" and each being a "Person") against or
in respect of the Applicants, the Partnerships or the Monitor, or affecting the Business
or the Property, are hereby stayed and suspended except with the written consent of the
applicable Applicant or Partnership, the DIP Agent and the Monitor, or leave of this
Court, provided that nothing in this Order shall (i) empower the Applicants and
Partnerships to carry on any business which the Applicants or Partnerships are not
lawfully entitled to carry on, (ii) exempt the Applicants and Partnerships from
compliance with statutory or regulatory provisions relating to health, safety or the
environment, (iii) prevent the filing of any registration to preserve or perfect a security
interest, or (iv) prevent the registration of a claim for lien.
NO INTERFERENCE WITH RIGHTS
16. THIS COURT ORDERS that during the Stay Period, no Person shall
discontinue, fail to honour, alter, interfere with, repudiate, terminate or cease to
perform any right, renewal right, contract, agreement, licence or permit in favour of or
held by the Applicants or Partnerships, except with the written consent of the relevant
Applicant or Partnership, the DIP Agent and the Monitor, or leave of this Court.
CONTINUATION OF SERVICES
17. THIS COURT ORDERS that during the Stay Period, all Persons having oral or
written agreements with an Applicant or Partnership or statutory or regulatory
mandates for the supply of goods and/or services, including without limitation all
computer software, communication and other data services, centralized banking
services, payroll services, insurance, transportation, services, utility or other services to
the Business, an Applicant or Partnership, are hereby restrained until further Order of
- 10 -
this Court from discontinuing, altering, interfering with or terminating the supply of
such goods or services as may be required by the Applicants or Partnerships, and that
the Applicants and Partnerships shall be entitled to the continued use of their current
premises, telephone numbers, facsimile numbers, Internet addresses and domain
names, provided in each case that the normal prices or charges for all such goods or
services received after the date of this Order are paid by the Applicants and
Partnerships in accordance with normal payment practices of the Applicants or
Partnerships or such other practices as may be agreed upon by the supplier or service
provider and each of the Applicants or Partnerships, the DIP Agent and the Monitor, or
as may be ordered by this Court.
NON-DEROGATION OF RIGHTS
18. THIS COURT ORDERS that, notwithstanding anything else contained herein,
no creditor of the Applicants and Partnerships shall be under any obligation after the
making of this Order to advance or re-advance any monies or otherwise extend any
credit to the Applicants and Partnerships. Nothing in this Order shall derogate from
the rights conferred and obligations imposed by the CCAA.
PROCEEDINGS AGAINST DIRECTORS AND OFFICERS
19. THIS COURT ORDERS that during the Stay Period, and except as permitted by
subsection 11.5(2) of the CCAA, no Proceeding may be commenced or continued
against any of the former, current or future directors or officers of the Applicants with
respect to any claim against the directors or officers that arose before the date hereof
and that relates to any obligations of the Applicants or Partnerships whereby the
directors or officers are alleged under any law to be liable in their capacity as directors
or officers for the payment or performance of such obligations, until a compromise or
arrangement in respect of the Applicants and Partnerships, if one is filed, is sanctioned
by this Court or is refused by the creditors of the Applicants or Partnerships or this
Court.
-11-
DIRECTORS' AND OFFICERS' INDEMNIFICATION AND CHARGE
20. THIS COURT ORDERS that the Applicants shall indemnify their directors and
officers from all claims, costs, charges and expenses relating to the failure of the
Applicants or Partnerships, after the date hereof, to make payments of the nature
referred to in subparagraphs 6(a), 8(a), 8(b) and 8(c) of this Order which they sustain or
incur by reason of or in relation to their respective capacities as directors and/or officers
of the Applicants except to the extent that, with respect to any officer or director, such
officer or director has actively participated in the breach of any related fiduciary duties
or has been grossly negligent or guilty of wilful misconduct.
21. THIS COURT ORDERS that the directors and officers of the Applicants shall be
entitled to the benefit of and are hereby granted a charge (the "Directors' Charge") on
the Property, which charge shall not exceed an aggregate amount of $8.6 million, as
security for the indemnity provided in paragraph 20 of this Order. The Directors'
Charge shall have the priority set out in paragraphs 40 and 43 herein.
22. THIS COURT ORDERS that, notwithstanding any language in any applicable
insurance policy to the contrary, (a) no insurer shall be entitled to be subrogated to or
claim the benefit of the Directors' Charge, and (b) the Applicants' directors and officers
shall only be entitled to the benefit of the Directors' Charge to the extent that they do
not have coverage under any directors' and officers' insurance policy, or to the extent
that such coverage is insufficient to pay amounts indemnified in accordance with
paragraph 20 of this Order.
APPOINTMENT OF MONITOR
23. THIS COURT ORDERS that Deloitte is hereby appointed pursuant to the
CCAA as the Monitor, an officer of this Court, to monitor the Property and the
Applicants' and Partnerships' conduct of the Business with the powers and obligations
set out in the CCAA or set forth herein and that the Applicants and Partnerships and
- 12 -
their shareholders, officers, directors, and Assistants shall advise the Monitor of all
material steps taken by the Applicants and Partnerships pursuant to this Order, and
shall co-operate fully with the Monitor in the exercise of its powers and discharge of its
obligations.
24. THIS COURT ORDERS that the Monitor, in addition to its prescribed rights
and obligations under the CCAA, is hereby directed and empowered to:
(a) monitor the Applicants' and Partnerships' receipts and disbursements;
(b) report to this Court at such times and intervals as the Monitor may deem
appropriate with respect to matters relating to the Applicants, the
Partnerships, Property, the Business, and such other matters as may be
relevant to the proceedings herein;
(c) assist the Applicants and Partnerships, to the extent required by the
Applicants and Partnerships, in their dissemination, to the DIP Agent and its
counsel of financial and other information as agreed to between the
Applicants and Partnerships and the DIP Agent which may be used in these
proceedings including reporting on a basis to be agreed with the DIP Agent
and perform such other duties and exercise such powers as may be
contemplated to be performed and exercised by the Monitor under the DIP
Documents;
(d) advise the Applicants and Partnerships in their preparation of the Applicants'
and Partnerships' cash flow statements and reporting required by the DIP
Agent, which information shall be reviewed with the Monitor and delivered
to the DIP Agent and its counsel in compliance with the DIP Documents, or
as otherwise agreed to by the DIP Agent;
(e) advise the Applicants and Partnerships in their development of the Plan and
any amendments to the Plan;
-13-
'32
assist the Applicants and Partnerships, to the extent required by the
Applicants and Partnerships, with the holding and administering of creditors'
or shareholders' meetings for voting on the Plan;
have full and complete access to the books, records and management,
employees and advisors of the Applicants and the Partnerships and to the
Business and the Property to the extent required to perform its duties arising
under this Order;
(h) be at liberty to engage independent legal counsel or such other persons as the
Monitor deems necessary or advisable respecting the exercise of its powers
and performance of its obligations under this Order;
consider, and if deemed advisable by the Monitor, prepare a report and
assessment on the Plan; and
perform such other duties as are required by this Order or by this Court from
time to time.
25. THIS COURT ORDERS that the Monitor shall not take possession of the
Property and shall take no part whatsoever in the management or supervision of the
management of the Business and shall not, by fulfilling its obligations hereunder, be
deemed to have taken or maintained possession or control of the Business or Property,
or any part thereof.
26. THIS COURT ORDERS that nothing herein contained shall require the Monitor
to occupy or to take control, care, charge, possession or management (separately and/ or
collectively, "Possession") of any of the Property that might be environmentally
contaminated, might be a pollutant or a contaminant, or might cause or contribute to a
spill, discharge, release or deposit of a substance contrary to any federal, provincial or
other law respecting the protection, conservation, enhancement, remediation or
rehabilitation of the environment or relating to the disposal of waste or other
(f)
(g)
(i)
a)
- 14 -
contamination including, without limitation, the Canadian Environmental Protection Act,
the Ontario Environmental Protection Act, the Ontario Water Resources Act, or the Ontario
Occupational Health and Safety Act and regulations thereunder (the "Environmental
Legislation"), provided however that nothing herein shall exempt the Monitor from any
duty to report or make disclosure imposed by applicable Environmental Legislation.
The Monitor shall not, as a result of this Order or anything done in pursuance of the
Monitor's duties and powers under this Order, be deemed to be in Possession of any of
the Property within the meaning of any Environmental Legislation, unless it is actually
in possession.
27. THIS COURT ORDERS that the Monitor shall provide any creditor of an
Applicant or Partnership with information provided by the Applicant or Partnership in
response to reasonable requests for information made in writing by such creditor
addressed to the Monitor. The Monitor shall not have any responsibility or liability
with respect to the information disseminated by it pursuant to this paragraph. In the
case of information that the Monitor has been advised by an Applicant or Partnership is
confidential, the Monitor shall not provide such information to creditors unless
otherwise directed by this Court or on such terms as the Monitor and the Applicant or
Partnership may agree.
28. THIS COURT ORDERS that, in addition to the rights and protections afforded
the Monitor under the CCAA or as an officer of this Court, the Monitor shall incur no
liability or obligation as a result of its appointment or the carrying out of the provisions
of this Order, save and except for any gross negligence or wilful misconduct on its part.
Nothing in this Order shall derogate from the protections afforded the Monitor by the
CCAA or any applicable legislation.
29. THIS COURT ORDERS that the Monitor, counsel to the Monitor and Canadian
counsel to the Applicants and Partnerships shall be paid their reasonable fees and
disbursements, in each case at their standard rates and charges, by the Applicants and
- 15 -
Partnerships as part of the costs of these proceedings. The Applicants and Partnerships
are hereby authorized and directed to pay the accounts of the Monitor, counsel for the
Monitor and Canadian counsel for the Applicants and Partnerships on a twice-monthly
basis and, in addition, the Applicants and Partnerships are hereby authorized to pay to
the Monitor, counsel to the Monitor, and Canadian counsel to the Applicants and
Partnerships, retainers in the amounts of $400,000 each, to be held by them as security
for payment of their respective fees and disbursements outstanding from time to time.
30. THIS COURT ORDERS that the Monitor and its legal counsel shall pass their
accounts from time to time, and for this purpose the accounts of the Monitor and its
legal counsel are hereby referred to a judge of the Commercial List of the Ontario
Superior Court of Justice.
31. THIS COURT ORDERS that the Monitor, Canadian counsel to the Monitor, if
any, and the Applicants' and Partnerships' Canadian counsel shall be entitled to the
benefit of and are hereby granted a charge (the "Administration Charge") on the
Property, which charge shall not exceed an aggregate amount of $5 million, as security
for their professional fees and disbursements incurred at the standard rates and charges
of the Monitor and such counsel, both before and after the making of this Order in
respect of these proceedings. The Administration Charge shall have the priority set out
in paragraphs 40 and 43 hereof.
DIP FINANCING
32. THIS COURT ORDERS that the Applicants and Partnerships are hereby
authorized and empowered to enter into, obtain and borrow under a credit facility (the
"DIP Credit Agreement") among the Applicants and Partnerships, Smurfit-Stone
Container Enterprises, Inc., Smurfit-Stone Container Corporation, the other "Loan
Parties" thereto, the "Lenders" party thereto, JPMorgan Chase Bank, N.A. as
Administrative Agent and Collateral Agent, and JPMorgan Chase Bank, N.A., Toronto
Branch, as Canadian Administrative Agent and Canadian Collateral Agent (the
y35-16-
Canadian Administrative Agent and the Canadian Collateral Agent are, collectively, the
"DIP Agent") substantially in the form attached as Exhibit "A" to the Jones Affidavit
(subject to such non-material amendments and modifications as the parties may agree
with a copy thereof being provided in advance to the Monitor), provided that
borrowings under such credit facility shall not exceed the principal amount of US$350
million unless permitted by further Order of this Court.
33. THIS COURT ORDERS that the Applicants and Partnerships are hereby
authorized and empowered to execute and deliver the DIP Credit Agreement and such
commitment letters, fee letters, credit agreements, mortgages, charges, hypothecs and
security documents, guarantees and other definitive documents (collectively, the "DIP
Documents"), as are contemplated by the DIP Documents or as may be reasonably
required by the DIP Agent pursuant to the terms thereof, and the Applicants and
Partnerships are hereby authorized and directed to pay and perform all of their
indebtedness, interest, fees, liabilities and obligations to the DIP Agent under and
pursuant to the DIP Documents as and when the same become due and are to be
performed, notwithstanding any other provision of this Order.
34. THIS COURT ORDERS that the DIP Agent, for and on behalf of the Secured
Parties (as defined in the DIP Credit Agreement) (collectively, the "DIP Lenders") shall
be entitled to the benefit of and is hereby granted a charge (the "DIP Lenders Charge")
on the Property, including without limitation the real property listed in Schedule "C"
attached hereto, which charge shall not exceed the aggregate amount owed to the DIP
Lenders under the DIP Documents.
35. THIS COURT ORDERS that the DIP Lenders Charge shall have the priority set
out in paragraphs 40 and 43 hereof. The DIP Lenders Charge shall attach to all existing
and after-acquired Property, as the case may be, including any lease, license, occupation
permit, or other contract, notwithstanding any requirement for the consent of the lessor,
licensor, or other party to such contract.
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236
36. THIS COURT ORDERS that, notwithstanding any other provision of this
Order:
(a) the DIP Agent may take such steps from time to time as it may deem
necessary or appropriate to file, register, record or perfect the DIP Lenders
Charge or any of the DIP Documents;
(b) upon the occurrence of an event of default under the DIP Documents or the
DIP Lenders Charge, the DIP Agent, upon five days notice to the Applicants
and Partnerships and the Monitor, may exercise any and all of its rights and
remedies on behalf of the DIP Lenders against the Applicants, the
Partnerships or the Property under or pursuant to the DIP Documents and
the DIP Lenders Charge, including without limitation, to make demand,
accelerate payment and give other notices, or to apply to this Court for the
appointment of a receiver, receiver and manager or interim receiver, or for a
bankruptcy order against the Applicants and Partnerships and for the
appointment of a trustee in bankruptcy of the Applicants, and upon the
occurrence of an event of default under the terms of the DIP Documents, the
DIP Agent shall be immediately entitled to cease making advances to the
Applicants and set off and/or consolidate any amounts owing by the DIP
Agent to the Applicants against the obligations of the Applicants to the DIP
Agent under the DIP Documents or the DIP Lenders Charge, seize and retain
proceeds from the sale of the Property and the cash flow of the Applicants
and Partnerships to repay amounts owing to the DIP Lenders in accordance
with the DIP Documents and the DIP Lenders Charge, as the case may be, but
subject to the priorities as set out in paragraphs 40 and 43 of this Order; and
(c) the foregoing rights and remedies of the DIP Agent shall be enforceable
against the Applicants and Partnerships and against any trustee in
X37
bankruptcy, interim receiver, receiver or receiver and manager of the
Applicants, the Partnerships or the Property.
37. THIS COURT ORDERS AND DECLARES that, notwithstanding paragraph 14,
but subject to paragraph 36, the DIP Agent and the DIP Lenders shall be treated as
unaffected by any stay created in these proceedings and the DIP Agent and the DIP
Lenders shall be treated as unaffected in any plan of arrangement or compromise filed
by the Applicants under the CCAA, or any proposal filed by the Applicants under the
Bankruptcy and Insolvency Act of Canada (the "BIN), with respect to any advances made
under the DIP Documents.
38. THIS COURT ORDERS that nothing in this Order shall be construed as
relieving the Applicants and Partnerships from their obligations to comply with the DIP
Documents and in particular the Budget (as defined in the DIP Credit Agreement).
39. THIS COURT ORDERS that the Applicants and the Partnerships party to the
Receivables Agreement are authorized to terminate the Receivables Agreement and
enter into and perform their obligations under the Termination and Reassignment
Agreement, each as defined in the Jones Affidavit.
VALIDITY AND PRIORITY OF CHARGES CREATED BY THIS ORDER
40. THIS COURT ORDERS that the priorities of the Directors' Charge, the
Administration Charge and the DIP Lenders Charge, as among them, shall be as
follows:
First - Administration Charge (to the extent of $1 million);
Second - Directors' Charge (to the extent of $8.6 million);
Third - DIP Lenders Charge; and
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Fourth - Administration Charge (for any amount greater than $1 million,
to a maximum of $5 million).
41. THIS COURT ORDERS that any distribution in respect of the DIP Lenders
Charge as amongst the beneficiaries thereto shall be governed by the DIP Documents.
42. THIS COURT ORDERS that the filing, registration or perfection of the
Directors' Charge, the Administration Charge or the DIP Lenders Charge (collectively,
the "Charges") shall not be required, and that the Charges shall be valid and enforceable
for all purposes, including as against any right, title or interest filed, registered,
recorded or perfected subsequent to the Charges coming into existence,
notwithstanding arty such failure to file, register, record or perfect.
43. THIS COURT ORDERS that each of the Directors' Charge, the Administration
Charge and the DIP Lenders Charge (all as constituted and defined herein) shall
constitute a charge on the Property and such Charges shall rank in priority to all other
security interests, trusts, liens, charges and encumbrances, statutory or otherwise
(collectively, "Encumbrances") in favour of any Person. The security granted by the DIP
Documents charging the Property shall have the same priority as the DIP Lenders
Charge.
44. THIS COURT ORDERS that except as otherwise expressly provided for herein,
or as may be approved by this Court, the Applicants and Partnerships shall not grant
any Encumbrances over any Property that rank in priority to, or pari passu with, any of
the Charges, unless the Applicants and Partnerships also obtain the prior written
consent of the Monitor, the DIP Agent and the beneficiaries of the Directors' Charge
and the Administration Charge, or further Order of this Court.
45. THIS COURT ORDERS that the Directors' Charge, the Administration Charge,
the DIP Documents and the DIP Lenders Charge shall not be rendered invalid or
unenforceable and the rights and remedies of the chargees entitled to the benefit of the
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X39
Charges (collectively, the "Chargees") and/or the DIP Agent thereunder shall not
otherwise be limited or impaired in any way by (a) the pendency of these proceedings
and the declarations of insolvency made herein; (b) any application(s) for bankruptcy
order(s) issued pursuant to BIA, or any bankruptcy order made pursuant to such
applications; (c) the filing of any assignments for the general benefit of creditors made
pursuant to the BIA; (d) the provisions of any federal or provincial statutes; or (e) any
negative covenants, prohibitions or other similar provisions with respect to borrowings,
incurring debt or the creation of Encumbrances, contained in any existing loan
documents, lease, sublease, offer to lease or other agreement (collectively, an
"Agreement") which binds the Applicants, the Partnerships, or any of them, and
notwithstanding any provision to the contrary in any Agreement:
(a) neither the creation of the Charges nor the execution, delivery, perfection,
registration or performance of the DIP Documents shall create or be deemed
to constitute a breach by any of the Applicants or Partnerships of any
Agreement to which it is a party;
(b) none of the Chargees shall have any liability to any Person whatsoever as a
result of any breach of any Agreement caused by or resulting from the
Applicants and Partnerships entering into the DIP Credit Agreement, the
creation of the Charges, or the execution, delivery or performance of the DIP
Documents; and
(c) the payments made by the Applicants and the Partnerships pursuant to this
Order or the DIP Credit Agreement or the other DIP Documents and the
granting of the Charges do not and will not constitute fraudulent preferences,
fraudulent conveyances, oppressive conduct, settlements or other
challengeable, voidable or reviewable transactions under any applicable law.
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46. THIS COURT ORDERS that any Charge created by this Order over leases of
real property in Canada shall only be a Charge in the relevant Applicant's or
Partnership's interest in such real property leases.
RECOGNITION
47. THIS COURT ORDERS AND DECLARES that the Partnerships are entities
which are entitled to relief under section 268 of the BIA.
48. THIS COURT ORDERS AND DECLARES that the proceedings commenced on
January 26, 2009 by the Applicants and Partnerships under chapter 11 of title 11 of the
United States Bankruptcy Code in the United States Bankruptcy Court for the District of
Delaware (the "US Bankruptcy Proceedings") be and hereby are recognized as a
"foreign proceeding" as defined by section 267 of the BIA.
49. THIS COURT ORDERS AND DECLARES that with respect to the
Partnerships, the Interim Order (I) Authorizing Debtors (A) to Obtain Post-Petition
and 364(e) and (B) to Utilize Cash Collateral Pursuant to 11 U.S.C. §363, (II) Granting
Adequate Protection to Pre-Petition Secured Parties Pursuant to 11 U.S.C. §§ 361, 362,
363 and 364 and (Ill) Scheduling Final Hearing Pursuant to Bankruptcy Rules 4001(B)
and (C) (the "US Order") made by the United States Bankruptcy Court for the District of
Delaware on Tuesday January 27, 2009, a copy of which is attached to the affidavit of
Alexander D. Rose, sworn January 27, 2009 as Exhibit "A", inter cilia, authorizing and
approving the DIP Facility provided for under the DIP Credit Agreement (both as
defined in the US Order) is hereby recognized and given full effect in all provinces and
territories of Canada, pursuant to section 268 of the BIA.
50. THIS COURT ORDERS that, in aid of the recognition of the US Order
contained at paragraph 49 above, the provisions of this Order as they relate to the DIP
Documents and the grant of the DIP Lenders Charge shall apply to the Partnerships and
their Property as if they were Applicants herein, and the Partnerships are subject to all
obligations and provisions in favour of the DIP Lenders contained in paragraphs 32 to
45 of this Order.
SERVICE AND NOTICE
51. THIS COURT ORDERS that (i) the Applicants and the Partnerships shall give
notice to the Monitor concurrently with any request that any of them may submit to the
DIP Lenders for release of any of the Collateral from the DIP Liens (each as defined in
the DIP Documents) or for the release of proceeds of such Collateral; and (ii) in
addition, the DIP Agent shall give notice to the Monitor promptly following any request
from the Applicants or the Partnerships pursuant to the DIP Documents for the consent
of the Lenders to release all or substantially all of the Collateral from the Liens (each as
defined in the DIP Documents), or for the consent of the Supermajority Lenders to
release any material part of the Collateral from the Liens or for the release of proceeds
of such collateral.
52. THIS COURT ORDERS that the Applicants and Partnerships shall, within ten
(10) business days of the date of entry of this Order, cause a notice to be sent to their
known creditors, other than employees and creditors to which the Applicants and
Partnerships owe less than $1,000, whether separately or as part of a notice to all such
creditors pursuant to the US Bankruptcy Proceedings, at their addresses as they appear
on the Applicants' and Partnerships' records notifying them of this filing and the
address of the Monitor's website where a copy of this Order is posted, and shall
promptly send a copy of this Order to any interested Person who requests a copy. The
Monitor is relieved of its obligation under Section 11(5) of the CCAA to provide a copy
of this Order, but may assist the Applicants and Partnerships in sending the notice
referred to above.
53. THIS COURT ORDERS that the Applicants and Partnerships and the Monitor
be at liberty to serve any materials and orders in these proceedings, any notices or other
w.:742
correspondence, by forwarding true copies thereof by prepaid ordinary mail, courier,
personal delivery or electronic transmission to the Applicants' and Partnerships'
creditors or other interested parties at their respective addresses as last shown on the
records of the Applicants and Partnerships and that any such service or notice by
courier, personal delivery or electronic transmission shall be deemed to be received on
the next business day following the date of forwarding thereof, or if sent by ordinary
mail, on the third business day after mailing.
54. THIS COURT ORDERS that the Applicants and Partnerships, the Monitor, and
any party who has filed a Notice of Appearance may serve any court materials in these
proceedings by e-mailing a PDF or other electronic copy of such materials to counsels'
email addresses as recorded on the Service List from time to time, in accordance with
the E-filing protocol of the Commercial List to the extent practicable, and the Monitor
may post a copy of any or all such materials on its website at
www.deloitte.com/ ca/ smurfitstonecanada.
GENERAL
55. THIS COURT ORDERS that the Applicants or Partnerships or the Monitor may
from time to time apply to this Court for advice and directions in the discharge of its
powers and duties hereunder.
56. THIS COURT ORDERS that nothing in this Order shall prevent the Monitor
from acting as an interim receiver, a receiver, a receiver and manager, or a trustee in
bankruptcy of the Applicants, the Partnerships, the Business or the Property.
57. THIS COURT HEREBY REQUESTS the aid and recognition of any court,
tribunal, regulatory or administrative body having jurisdiction in Canada or in the
United States, to give effect to this Order and to assist the Applicants and Partnerships,
the Monitor and their respective agents in carrying out the terms of this Order. All
courts, tribunals, regulatory and administrative bodies are hereby respectfully
943
requested to make such orders and to provide such assistance to the Applicants and
Partnerships and to the Monitor, as an officer of this Court, as may be necessary or
desirable to give effect to this Order, to grant representative status to the Monitor in any
foreign proceeding, or to assist the Applicants and Partnerships and the Monitor and
their respective agents in carrying out the terms of this Order.
58. THIS COURT ORDERS that each of the Applicants and Partnerships and the
Monitor be at liberty and is hereby authorized and empowered to apply to any court,
tribunal, regulatory or administrative body, wherever located for the recognition of this
Order and for assistance in carrying out the terms of this Order.
59. THIS COURT ORDERS that any interested party (including the Applicants and
Partnerships and the Monitor) may apply to this Court to vary or amend this Order on
not less than seven ('7) days notice to any other party or parties likely to be affected by
the order sought or upon such other notice, if any, as this Court may order.
60. THIS COURT ORDERS that, (a) notwithstanding paragraph 59, no order shall
be made varying, rescinding or otherwise affecting the provisions of this Order with
respect to the DIP Documents or the DIP Lenders Charge unless notice of a motion for
such order is served on the Applicants and Partnerships, the Monitor and the DIP
Agent returnable no later than February 18, 2009; and (b) subject to court order, prior to
February 18, 2009, the amounts that can be borrowed by the Canadian Borrower under
the Canadian Revolving Commitment and the US Revolving Commitment (each as
defined in the DIP Credit Agreement) shall be limited to the amounts set out in sections
2.2(a) and 2.3(a) of the DIP Credit Agreement.
61. THIS COURT ORDERS that this Order and all of its provisions are effective as
of 12:01 a.m. Eastern Standard Time on the date of this Order.
ENTERED AT 1 INSCRIT A TORONTOON 1 BOOK NO:LE DANS LE REGtSTRE NO.:
JAN 2 8 2009
PER PART\j
SCHEDULE "A"
Smurfit-Stone Container Canada Inc.
3083527 Nova Scotia Company
MBI Limited/Limit&e
639647 British Columbia Ltd.
B.C. Shipper Supplies Ltd.
Specialty Containers Inc.
605681 N. B. Inc.
Francobec Company
Stone Container Finance Company of Canada II
26
SCHEDULE "B"
Smurfit-MBI
SLP Finance General Partnership
SCHEDULE "C"
Quebec Timberlands (approximately 960,000 acres) in Quebec
1000 Chemin de 1'Usine, La Tuque, Quebec
90 Parc Industriel, Matane, Quebec
15400 Sherbrooke Street East, Montreal, Quebec
211 Route 301 Portage-du-Fort, Quebec
150 chemin St-Edgar, New Richmond, Quebec
819 Main Street, Bathurst, New Brunswick
747 Appleby Line, Burlington, Ontario
200 Chemin de la Riviere-au-Lait, Canton de Vallieres, Haut Saint-Maurice, Quebec
1115 34th Ave South East, Calgary, Alberta
8705 2401 Street, Edmonton, Alberta
Foot of Gifford Street, New Westminster, British Columbia
1360 Inkster Boulevard, Winnipeg, Manitoba
730 Islington Ave., Toronto, Ontario
200 Water Street, Whitby, Ontario
390 Woodlawn Road, West, Guelph, Ontario
8150 Parkhill Drive, Milton, Ontario
1035 Hodge Street, Saint-Laurent, Quebec
5550 Royalrnount Ave, Town of Mount-Royal, Quebec
1400, 1st Ave East, Regina, Saskatchewan
Court File No: CV-09-7966-000LIN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36
AND IN THE MATTER OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF SMURFIT-STONECONTAINER CANADA INC. AND THE OTHER APPLICANTS LISTED ON SCHEDULE "A"
