Leading global producer of PET bottles, Constar International Inc and certain of its subsidiaries recently filed for reorganization under Chapter 11 in the U.S. Bankruptcy Court in order to reduce its outstanding indebtedness by US$175 mln and reduce its annual interest expense by approximately US$19.3 mln. In this regard, the company-which in October struck a four year supply agreement with PepsiCo - has received support from the holders of a majority in principal amount of the Company's Subordinated Notes regarding a debt-for-equity exchange. However, the company release pressed that all of its global operations - including all of its manufacturing and distribution facilities in the U.S. and Europe - are open and operating on normal schedules.
As per Constar's proposed plan of reorganization, holders of the Subordinated Notes will convert 100% of the face amount of the Subordinated Notes and the full amount of the interest payment due December 1, 2008, which will not be paid, into common stock of the reorganized company. The Company anticipates that the restructuring will be completed by early spring of 2009.