Appleton Papers' required stock repurchases to exceed limits in notes' indentures

By Jennifer Chiou

New York, May 12 - Appleton Papers Inc. said it will make some of its required share repurchases under its employee stock ownership plan on an installment basis, noting that the total payments for the stock redemptions will exceed the covenant limits under the indentures of its senior notes and senior subordinated notes, according to a 10-Q filing with the Securities and Exchange Commission.

Appleton Papers said it appears that the total payments for stock redemptions will exceed the covenant limitations under the note indentures by $5.5 million.

The company said defaults on any of the debt covered by the covenants could result in acceleration of the notes and Appleton said it may not have sufficient funds to satisfy its obligations under the senior notes and senior subordinated notes.

In the second quarter, the Appleton, Wis., paper company said it will make $16 million in payments for stock redemptions, of which $5.8 million will be made in installment payments in order to comply with its financial covenants.

Appleton Papers added it is in talks with its financial and legal advisors about the impact of the projected stock redemption payments on the restrictive covenants of the note indentures.

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