Tembec's US subsidiary seeks bankruptcy relief
Forest products company Tembec (TSE:TMB) announced Monday that its US subsidiary has filed for Chapter 7 bankruptcy protection, part of the company's restructuring process that began in 2008.
The Quebec-based company said that Tembec USA, its non-operating US unit, has sought relief from a US bankruptcy court.
The US unit used to operate a coated paper mill in St. Francisville, Louisiana, which was idled in July 2007, with the property and equipment sold to a third party nearly two years later for about $12 million.
The non-operating subsidiary currently owes US$81 million, and has assets of US$1 million.
Canadian Tembec is a diversified forest products company, with its main operations in Canada and France, and manufactures pulp, paper and wood products. The company began restructuring its debt in February 2008, as newspapers and other print publications were hit by the recession and the rising popularity of internet news.
Tembec said that as a result of the US bankruptcy submission, it will reduce its consolidated accrued benefit obligation by US$9 million.
The company's shares fell nearly 4% on Monday to trade at $5.05 as of 3:11pm EST.
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