Orchids Paper Products Co. files Chapter 11 petition
LA PALMA, Calif.--January 10, 1995--Orchids Paper Products
Co., a privately held manufacturer of paper towels and other consumer paper
products, has filed for Chapter 11 protection under the U.S. Bankruptcy Code.
The filing, case No. SA-95-10227JR, was made Jan. 9 in the U.S. Bankruptcy
Court in Orange County. The petition listed assets of approximately $56
million and liabilities of $75 million. The company's annual revenues are
about $85 million.
As debtor-in-possession, the company is temporarily protected from creditor
claims and has approximately 120 days to present a repayment plan to the
court.
"The industry outlook is excellent, but the company and its largest secured
creditor, CIT Group/Business Credit, agree that Orchids Paper Products needs
to restructure its balance sheet in order to take advantage of this outlook,"
said Frank R. Budetti, a partner in the consulting firm of Ballenger, Budetti
and Associates. He has been interim president and chief executive officer
since Oct. 6.
"The company and CIT will prepare a plan of reorganization under which CIT
will become a major shareholder," he said. "At this point, we don't know how
much of the company will be owned by the CIT Group."
Orchids Paper Products is currently owned 55 percent by a group of previous
management personnel and 45 percent by a group of companies that were
unsecured creditors when the company entered Chapter 11 in late 1992. It
emerged from that filing on April 12, 1994.
"The previous reorganization failed to correct the weaknesses in the
company's financial structure," Budetti said. "We expect that this
reorganization will resolve those problems."
Budetti said he expects no layoffs among the company's 500 employees.
Orchids Paper Products has five plants at four locations: La Palma; Flagstaff,
Ariz.; Pryor, Okla.; and Cartersville, Ga.
Orchids' product line comprises paper towels and napkins, and bath tissue
and facial tissue, sold under private labels and the company's own Colortex
and Velvet brands.
Ballenger, Budetti and Associates is a Los Angeles-based firm that provides
accounting, consulting, interim management and related litigation services to
companies involved in turnarounds, insolvencies and reorganizations.
CONTACT: Frank R. Budetti
714/523-7881
OCTA receives $46.5 million from county investment pool
ORANGE, Calif.--January 9, 1995--A $46.5 million authorization
granted to the Orange County Transportation Authority (OCTA) from the Orange
County Investment Fund's frozen assets will allow timely release of Measure M
"turnback" funds to cities.
The authorization also will be earmarked for payment of debt service, the
continued construction of freeway projects and OCTA payroll.
OCTA's authorization is part of a $1 billion release of Orange County
Investment Pool funds that U.S. Bankruptcy Judge John Ryan approved last
month. Judge Ryan directed the seven-member Orange County Investment Pool
Committee to distribute on a hardship basis funds to cities, schools and
special districts. OCTA is a special district.
The Authority will meet its next scheduled payment on Jan. 25 of $3.3
million in Measure M "turnback" funds to Orange County cities for local street
improvements. More than 14 percent of all Measure M transportation sales tax
dollars are returned to cities for local needs. Last year, Measure M returned
more than $22 million to cities.
OCTA's ability to meet turnback requirements will come as welcome news to
local cities which have millions of dollars frozen in the county's bankrupt
investment pool.
"Measure M turnback funds are critical for the continued upkeep of local
streets throughout Orange County," said newly elected OCTA Chairman Charles V.
Smith. "We want to make sure local projects to improve city streets continue
on schedule."
The additional $46.5 million continues to solidify OCTA's financial position
in the wake of the county's bankruptcy filing.
Early last month, OCTA developed a 100 Day Operating Plan to ensure payment
of debt obligations and to continue transit service and ongoing construction
projects. Full funding for the 100 days has been secured.
Monday, the Authority started to form an action plan for the next six
months' operations and fiscal year 1995-96.
CONTACT: Orange County Transportation Authority, Orange
Elaine Beno, media relations manager, 714/560-5571
OCTA charts longer-term future
ORANGE, Calif.--January 9, 1995--In a bid to ensure long-term
public transportation services, the Orange County Transportation Authority
(OCTA) board of directors Monday called for the agency to form a six-month
action plan to address the fiscal impact to the Authority of the Orange County
Investment Pool.
The call for a longer, Six Month Stabilization Plan comes on the heels of a
100 Day Operating Plan approved shortly after the County of Orange declared
bankruptcy. OCTA has more than $1 billion in assets frozen in the county's
investment pool.
As it gets money back, OCTA can expect to lose $56 million in lost interest
earnings for the current fiscal year and as much as $306 million of lost
principal in the investment fund, based upon the county's 27 percent loss
projection for all pool participants.
"The 100 Day Operating Plan has been funded and is meeting our short-term
cash flow needs," said newly elected OCTA Chairman Chuck Smith. "We must now
look farther into the future."
OCTA has been able to keep buses and trains running and to proceed with work
on current freeway construction projects. OCTA now has set six goals to
create financial stability and provide public services including:
-- Determining the actual extent of OCTA's loss in the Orange County
Investment Pool.
-- Updating Measure M revenues, expenditure and schedules and revisiting the
Freeway Strategic Plan to reactivate critical projects.
-- Using the Bus System Improvement Project to determine bus service
priorities.
-- Freezing current staffing levels.
-- Adopting interim procedures for OCTA's treasury function.
-- Preparing a program by program impact assessment for all OCTA services
and projects.
The board also took action to restore work on two future projects.
Right-of-way purchases for the widening of the Santa Ana Freeway through
Anaheim, which had been temporarily suspended, will begin again in the
southernmost area of the project and for hardship cases which need immediate
settlement.
The other project to move forward is the widening of the Costa Mesa Freeway
(Route 55) between the Garden Grove Freeway (Route 22) and 17th Street in
Santa Ana. Construction contracts for this project will be awarded in June.
The Six Month Stabilization Plan will be an important part of the
Authority's efforts to formulate the budget for the next fiscal year. Adoption
of next year's budget will take place before July 1. Next year's budget, along
with the adoption of the Six Month Stabilization Plan, will provide OCTA with
an 18-month horizon for living within its means.
As part of next year's budget, OCTA will seek to restructure its long and
short-term debt obligations. Measure M projects currently under construction
including the improvement of the El Toro Y Interchange will continue and will
be completed within the next 18 months.
During the last month, successful actions were taken to meet short term
needs with the successful funding and implementation of the Authority's 100
Day Operating Plan. These actions included securing ongoing revenue sources,
expediting federal and state grants and the suspension of many design and
right-of-way acquisition contracts for longer term projects.
A hiring freeze and halt to all discretionary purchases and spending was
also implemented.
The 100 Day Operating Plan has enabled OCTA to meet its immediate goals of
paying debt service, maintaining bus and rail operations and continuing its
ongoing freeway construction projects.
CONTACT: Orange County Transportation Authority
Elaine Beno, 714/560-5571