Each issue of PaperMoney is approximately 500 fact filled pages.
Logout
Click here for Pulp & Paper Radio International
The Paperitalo Library
Free Downloads
Search
My Profile
Login
Management Side
KapStone to Acquire U.S. Corrugated
Print

Northbrook, Illinois, USA, 22 September 2011 -- /PRNewswire/ -- KapStone Paper and Packaging Corporation (NYSE: KS) today announced that it has signed an agreement to acquire the stock of U.S. Corrugated, Inc. (USC) for USD 330 million in cash, subject to certain post-closing adjustments. Closing of the acquisition is subject to a number of customary conditions, including regulatory review and receipt of financing.

USC operates a 240,000 ton recycled containerboard paper mill in Cowpens, South Carolina, and 20 converting facilities in the eastern and midwestern United States. USC will dispose of six of those operating facilities before the closing. Those facilities will remain under the management and control of Dennis Mehiel, chairman of the board and current majority stockholder of U.S. Corrugated.

USC has been successful in creating strong, long-term customer relationships resulting from outstanding service, quality, and innovation. In 2010, the operations to be acquired from USC generated USD 423 million in net sales.

"Acquiring USC is an outstanding opportunity for numerous reasons," said Roger W. Stone, chairman and chief executive officer. "The acquisition immediately adds value for our shareholders by increasing earnings, generating very strong free cash flow, and reducing risk. The deal is accretive to our bottom-line from day one. Our balance sheet, which was very strong going into this transaction, remains very strong after the acquisition maintaining a leverage ratio of debt to EBITDA of less than two times. The combined company is expected to deliver substantial free cash flow in the first year allowing KapStone to quickly de-lever," he said.

"This acquisition will increase our exposure to the highly desirable containerboard segment. Also, we believe that because USC is a net purchaser of 195,000 tons of containerboard that the risk of costly economic downtime will be mitigated throughout the economic cycle," Stone said.

"KapStone is well-positioned to integrate USC's operations and anticipates approximately USD 8 million of day one and first year redundancy expense eliminations. Additionally, operating synergies are expected to result in at least an additional USD 8 million in profit improvement annually within the first 18 months," Stone continued. "Strategically, the acquisition of USC transforms KapStone into a much more profitable and stronger company, providing additional momentum for KapStone to continue its record of excellence for increasing value to our shareholders."

KapStone has committed financing from Bank of America, N.A. and Barclays Capital for a USD 525 million senior secured credit facility. The new credit facility is expected to consist of a USD 150 million revolving credit facility and a USD 375 million term loan maturing over five years. At closing, a portion of the proceeds will be used to pay off KapStone's existing USD 101 million term loan.

The transaction is expected to close in late October 2011.

KapStone will host a conference call on 23 September to discuss the acquisition. A presentation to be viewed in conjunction with the call will also will be available on the KapStone Web site, http://www.kapstonepaper.com, in the "Investors" section. The webcast also is being distributed through the Thomson StreetEvents Network. Individual investors can listen to the call at http://earnings.com, Thomson's individual investor portal, powered by StreetEvents. A replay of the webcast will be available for 30 days on the company's Web site following the call.

Headquartered in Northbrook, Illinois, KapStone Paper and Packaging Corporation is a leading North American producer of unbleached kraft paper products and linerboard. The company is the parent company of KapStone Kraft Paper Corporation, which includes paper mills in Roanoke Rapids, North Carolina, and North Charleston, South Carolina, a lumber mill in Summerville, South Carolina, and five chip mills in South Carolina. The business employs approximately 1600 people.

 

Related Articles:


Powered by Bondware
News Publishing Software

The browser you are using is outdated!

You may not be getting all you can out of your browsing experience
and may be open to security risks!

Consider upgrading to the latest version of your browser or choose on below: