COVINGTON - Smurfit-Stone Container Corp., which has maintained a presence in Newton County for more than 30 years, filed for Chapter 11 bankruptcy protection Monday as it looked to restructure a heavy debt amid a credit freeze.
The impact to the Covington plant is unclear.
As part of its efforts to reduce costs, Smurfit-Stone has been reducing facilities and plans to close six additional plants in the next six months, according to Spokesman Mike Mullin.
Mullin would not disclose the location of the plants to be closed.
"We never speak about a particular facility," he said.
The Covington plant, located at 6180 Jersey Alcovy Road, was established in 1972 and employs more than 100 people, according to information obtained from the Covington-Newton County Chamber of Commerce.
"Over the past decade, we built one of North America's premier container board and packaging companies. But, our financial performance has not reflected the full potential of our earnings power due to higher cost operations and burdensome debt levels dating back to the original formation of the company," said Smurfit-Stone Chairman and CEO Patrick J. Moore. "As a result of our three-year transformation program, we have been focused on improving our operating performance and our operations are now well invested and far more cost effective.
"Yet, the acceleration of the unprecedented global economic recession has weakened demand for packaging, and the frozen credit markets have prevented an out-of-court refinancing of our capital structure. While this is not the outcome we anticipated, we are taking this action to become a more financially healthy company.
"This combination of a modern, cost-effective operating platform and a reorganized capital structure through Chapter 11 will represent a new beginning for Smurfit-Stone."
Smurfit-Stone is the largest producer of cardboard box materials in North America. The Chicago-based company, which employs nearly 22,000 people working at about 150 facilities across North America and in Asia filed for protection from creditor claims in U.S. Bankruptcy Court in Wilmington, Del.
Smurfit-Stone has been struggling to repay its debt, which at the end of the third quarter was $3.5 billion - nearly half its yearly revenue of roughly $7.5 billion.
The company reported it had received commitments for as much as $750 million in debtor-in-possession financing to fund continuing operations.
The Associated Press contributed to this article.
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