Orchids Paper Products amends credit agreement, explores refinancing

By Wendy Van Sickle

Columbus, Ohio, July 5 – Orchids Paper Products Co. amended its credit agreement on June 30 to waive the fixed-charge coverage ratio for the period ended June 30 and make other changes, according to a company news release.

Also waived was a requirement for a cash reserve to be funded by June 30.

Additionally, the company agreed not to make any dividend or other distribution payment on its equity unless it has achieved a leverage ratio of less than 4.0 to 1.0 for two consecutive fiscal quarters and no default or event of default exists or would exist following such payment.

The amount and timing of dividend payments otherwise remain subject to the judgment of the board of directors.

Orchids Paper is exploring the refinancing of some or all of its outstanding indebtedness with the goals of increasing its financial flexibility and creating greater available liquidity, subject to market conditions. A range of possible refinancing alternatives are being considered, according to the release.

The company aims for any potential refinancing transaction to close and fund in the third quarter of 2017.

“We continue to be confident that the completion of the Barnwell, S.C., mill and the increase in sales resulting from the announced new business, both of which occurred in June, bode well for Orchids’ forward-looking prospects, and the expected growth in earnings we believe will bring our financial leverage measures back in line over the subsequent periods,” chief executive officer Jeff Schoen said in the news release.

“In the meantime, debt refinancing alternatives will be considered to meet liquidity requirements which we anticipate would minimize any long-term dilution of shareholders.”

U.S. Bank NA is the administrative agent.

Orchids makes consumer tissue products and is based in Pryor, Okla.

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