Constar International (CNST) Receives Support From Holders of Subordinated Notes; Files Voluntary Petitions for Reorganization Under Chapter 11

December 30, 2008 12:28 PM EST

Constar International Inc. (NASDAQ: CNST) has received support from the holders of a majority in principal amount of the Company's Subordinated Notes regarding a debt-for-equity exchange that will reduce the Company's outstanding indebtedness by $175 million and reduce its annual interest expense by approximately $19.3 million. To implement this pre-arranged restructuring, Constar and certain of its subsidiaries today filed voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court in Wilmington, Delaware.

All of Constar's global operations - including all of its manufacturing and distribution facilities in the U.S. and Europe - are open and operating on normal schedules, and the Company expects to continue to fulfill all customer orders as usual and provide uninterrupted customer service.

Michael Hoffman, President and CEO of Constar, said, "We are pleased to have received support from the holders of a majority in principal amount of our subordinated notes for a pre-arranged and consensual restructuring that significantly improves our balance sheet by eliminating $175 million in debt, reduces our annual cash interest obligations by approximately $19.3 million, and frees up cash to reinvest in our business to support future growth. We intend to continue to operate as usual during the restructuring process with minimal disruption to the business and our constituencies. We intend to pay all of our obligations in full - which includes providing pay and benefits to our employees as usual, honoring all contracts, and paying suppliers in full."

Pursuant to the Company'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's current equity will be cancelled, but all other creditor classes will be unimpaired. Importantly, all obligations owed by the Company to trade creditors in the ordinary course of business will be paid in full under the plan. The Company anticipates that the restructuring will be completed by early spring of 2009.

Constar International Inc. (Constar) is a global producer of polyethylene terephthalate (PET) plastic containers for food, beverages, and other end use applications.[SM]

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