Corporate parent of Fort Smith plant seeks bankruptcy protection

A Monday (Jan. 26) bankruptcy filing by Smurfit Stone Container Corp. is not expected to have a negative immediate effect on the 49 employees at the company’s cardboard sheet plant in Fort Smith (4600 Newlon Road).

Smurfit, which is nearing the end of a 3-year “transformation program,” announced Monday that it filed for bankruptcy reorganization. The company has an $800 million credit agreement that expires November 2009, and is carrying about $3.5 billion in debt.

“We don’t talk about the future of any particular facility,” Mike Mullin, director of media relations and public affairs, said when asked about Smurfit’s Fort Smith plant.

However, he said, immediate cuts or plant closures are not in the works. He said the company’s review of plant efficiencies within the system is a “normal course of business” that will not change during the reorganization.

Patrick J. Moore, chairman and CEO, said in the bankruptcy-announcement statement, “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.”

The company, one of the largest containerboard (cardboard box) and corrugated packaging manufacturers in the U.S., posted 2007 revenue of $7.4 billion and net income of $44 million. However, the company segment in which the Fort Smith plant operates posted a pre-tax operating income loss of $76 million in fiscal 2007.