NewPage Seeks to Shield Officials from Investor Grilling

NewPage Corp. says its executives are in danger of being treated like pawns as second-lien investors seek to probe the company’s plans for bonuses.

A bankruptcy judge has scheduled an emergency hearing Wednesday on the company’s bid to protect executives from being grilled by the investors.

The bonuses are linked to a turnaround business plan for NewPage, a preliminary proposal to the company’s Chapter 11 plan that will ultimately say how much each group of creditors will collect.

Second-lien bondholders who control more than half of a $1 billion-plus chunk of debt aren’t happy with the financial targets the company has set, NewPage’s lawyers say. They are questioning the executive bonuses for “ulterior motives.”

By challenging the bonuses, the second-lien investors are angling for “leverage in the overall plan formulation process,” according to NewPage attorneys.

Second-lien investors are demanding documents, and asking to question executives of the Ohio company in New York over the coming weekend — including Super Bowl Sunday.

NewPage attorneys say the group already has the information it needs, and seeks only to “harass, oppress and annoy” the company’s management

Apart from the second-lien debt, the beaten-up paper maker also has nearly $1.8 billion worth of first-lien debt to resolve in bankruptcy, as well as a posse of upset unsecured creditors, including the Pension Benefit Guaranty Corp.

Unsecured creditors complained in recent court filings that they’re being stonewalled by NewPage in their effort to look into a 2007 acquisition that may have hastened the company’s tumble into financial trouble.

NewPage took on debt in connection with the acquisition of Stora Enso Oyi, and later refinanced the loans. The official committee of unsecured creditors wants to look at the transactions, to see if there’s room for a legal challenge.

NewPage isn’t cooperating, creditors attorneys say, and they have only five weeks to decide whether the 2007 transaction and 2009 refinancing are vulnerable to legal challenge.