Atlanta, Georgia, USA, 25 July 2008 -- /PRNewswire/ -- Caraustar Industries, Inc. (Nasdaq: CSAR) today announced that it has sold its 50% membership interest in Premier Boxboard LLC (PBL), to its joint venture partner, Temple- Inland Inc. (NYSE: TIN), for USD 62 million.
Tax effects are expected to be minimal due to the company's ability to use net operating loss carry forwards. Caraustar will use the proceeds of the sale to repay all outstanding debt under its Senior Credit Facility -- comprised of a term loan and a revolving credit facility -- totaling approximately USD 34 million. Excess proceeds of approximately USD 28 million and estimated availability of USD 44 million under the revolving line of credit will be available to the company for working capital and debt repayment needs.
Michael J. Keough, president and chief executive officer of Caraustar, stated, "The company is focused on executing its plan to refinance its 7.375% Senior Notes. Completing the sale of our interest in PBL is the first step in that plan and raises a portion of the funds necessary to refinance the company's senior notes while mitigating exposure to the volatile housing market. Historically, paperboard production at PBL has been a mix of gypsum facing paper and medium. Caraustar will continue to produce gypsum facing paper at its Sweetwater mill, including higher margin specialty grades such as its SafeFace MR(TM), a mold-resistant facing paper."
The company has engaged J.P. Morgan Securities Inc. as its financial advisor to assist in evaluating its financial alternatives. In addition, the company is continuing its efforts to execute the remaining steps in its refinancing plan.
Caraustar Industries, Inc. is one of North America's largest integrated manufacturers of 100% recycled paperboard and converted paperboard products. The company is a socially responsible corporation, is committed to environmentally sound practices, and is dedicated to providing customers with outstanding value through innovative products and services. Caraustar has developed its leadership position in the industry through diversification and integration from raw materials to finished products. Caraustar serves the four principal recycled boxboard product end-use markets: tubes and cores, folding cartons, gypsum facing paper, and specialty paperboard products. For additional information on Caraustar, visit www.caraustar.com.