CHICAGO (MarketWatch) -- Shares of already-battered Smurfit-Stone slid further Thursday, falling more than 80% on a report that the packaging giant may be on the verge of bankruptcy.
Smurfit
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has told its lenders -- which hold about $3.5 billion of its paper -- that plunging sales and a cash shortage could land it Chapter 11, according to The Wall Street Journal.
Smurfit has hired bankruptcy lawyers and is seeking to find $750 million in debtor-in-possession financing, with a filing coming within two weeks, the paper said, citing unnamed sources.
The company, which makes cardboard packaging for a wide variety of industries, is a bellwether of the consumer slowdown. Its woes signal that the recession is both widening and deepening.
Shares of Smurfit were down 81% to 7 cents after scraping as low as a nickel at the open. A year ago, it was trading near $10.
Last month, the company said it was expecting fourth-quarter profit to come in "significantly lower" compared with the third quarter.
"North American packaging demand has deteriorated rapidly in the past several weeks and containerboard and pulp export markets have weakened even more dramatically," the company said at the time, adding that it has had to slash containerboard and paper production by up to 255,000 tons in the period.
Smurfit is not alone in feeling the pain. Before the start of trading, competitor MeadWestvaco
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said that it would cut about 2,000 jobs, or 10% of its global workforce, by the end of the year in the face of what it called "current economic challenges." That sent its shares down 1.5% to $10.82.
See full story on MeadWestvaco.
And International Paper
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, which recently announced its own job-slashing program, was down almost 6% to $10.07.
William Spain is a MarketWatch staff writer in Chicago.