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Smurfit-Stone warns lenders of possible bankruptcy filing: WSJ

Smurfit-Stone Container Corp. (SSCC), a manufacturer of paperboard and paper-based packaging products, has told its lenders it could file for bankruptcy amid weakening sales and a cash crunch, the Wall Street Journal reported quoting people familiar with the matter.

The company has hired bankruptcy counsel and financial advisers to obtain about $750 million in debtor-in-possession financing to fund its operations, said the paper. Once the company secures the financing, a Chapter 11 filing for protection from creditors could come within two weeks.

Smurfit-Stone, which had been on a borrowing spree, has been unable to repay its debts, amid the economic recession. The company, which manufactures a wide range of cardboard wrapping for computers, TV sets and office furniture, has been witnessing bleak sales.

The company has around $3.5 billion in outstanding debt and approximately $7.5 billion in annual sales. It has about $316 million in debt payments due this year, with a $7.3 million interest payment due later this week, the Journal noted citing the sources.

Through the sale of some of its profitable assets, the company reportedly has managed to pay off some of its debts. The company has around 20,000 employees and about 150 plants, mills and recycling centers worldwide.

Shares of SSCC closed Wednesday's regular trading session at $0.36. In the past 52 weeks, the stock has been trading in the range of $0.23 to $9.99.

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