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Caraustar Industries, Inc.
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Atlanta, Georgia, USA, 01 June 2009 -- /PRNewswire/ -- Caraustar Industries, Inc. (Nasdaq: CSAR) has reached agreement with holders of approximately 83% of its 7 3/8% Senior Notes maturing 01 June 2009, and 91% of its 7 1/4% Senior Notes maturing 01 May 2010, on the terms of a cooperative financial restructuring that would reduce the company's debt obligations by approximately USD 135 million.

The company and the consenting noteholders have entered into an agreement by which the noteholders have agreed to complete the restructuring through a prenegotiated plan of reorganization. The plan will be submitted to the United States Bankruptcy Court for the Northern District of Georgia in the voluntary Chapter 11 case commenced by Caraustar on 31 May 2009, and will be subject to court approval, among other conditions.

Under the plan, holders of outstanding shares of Caraustar's common stock will receive their pro rata share of USD 2.9 million, or approximately USD 0.10 per share, subject to certain conditions contained in the plan. In addition, the plan contemplates the exchange of the company's existing 7 3/8% and 7 1/4% Senior Notes for an aggregate of USD 85 million in new Senior Secured Notes and 100% of the common stock of the reorganized company. The reorganized company is expected to emerge as a private entity with Wayzata Investment Partners LLC becoming the company's controlling shareholder.

"Caraustar took decisive action to substantially reduce the company's debt and prospectively reduce costs," said Michael J. Keough, president and chief executive officer . "Once our financial restructuring is complete, we believe Caraustar's new capital structure combined with the cost savings achieved by operating as a private entity will provide a lean and flexible foundation for sustainable profitability and better position the company to meet the challenges of our industry and this recessionary economy head on," Keough said.

A key feature of the plan is that all trade creditors, suppliers, customers, and employees will receive all amounts owed to them. The company is seeking authority from the court to pay these amounts in the ordinary course of business. "The company plans to ensure that customers, trade creditors, suppliers, and employees see no difference in Caraustar's operations while we complete our recapitalization. The plan and the authority we will seek from the court will provide for uninterrupted payments of our existing and future obligations to these constituents and provide for seamless continuation of our operations," Keough said.

In conjunction with the restructuring, Caraustar has secured credit approval from General Electric Capital Corporation for a USD 75 million senior secured debtor-in-possession revolving credit facility (the DIP facility) converting at emergence from bankruptcy into a USD 75 million senior secured revolving credit facility, the latter to become effective upon confirmation of the plan by the court. Proceeds from the DIP facility may be used for cash collateralizing outstanding letters of credit,  paying for goods and services in the ordinary course of the business, and general corporate purposes.

The company and its domestic subsidiaries filed their voluntary Chapter 11 petitions in the United States Bankruptcy Court for the Northern District of Georgia on 31 May 2009. The cases will be jointly administered and the main case has been assigned case number 09-73830. Additional information about Caraustar's restructuring is available at  http://www.caraustar.com/restructure.html or via the company's restructuring information line, 1-800-251-2580.

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 the company's Web site at www.caraustar.com.

 



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