Chesapeake Announces Credit Agreement Amendment
Richmond, Virginia, USA, 16 January 2008 -- /PRNewswire/ -- Chesapeake Corporation (NYSE:CSK) today announced that it has agreed with its lenders on amendment of certain fourth quarter 2007 covenants of its Senior Revolving Credit Facility in anticipation of the previously announced lower than expected fourth quarter 2007 operating results.
As previously announced, lower than expected fourth quarter volumes, most notably in the South African beverage business and certain areas within the pharmaceutical and healthcare packaging business, combined with higher than expected start-up expenses for a new product line in the alcoholic drinks packaging business, are the primary reasons for the shortfall.
In addition, the company had expected to receive the cash proceeds from the sale of its tobacco packaging facility in Bremen, Germany, before year end, but the cash proceeds were not received until the first week of January. Preliminary 2007 operating earnings, excluding special items, are now expected to be approximately USD 41 million compared to USD 45 million for 2006.
The company's Senior Revolving Credit Facility was amended for the fourth quarter of 2007 to increase the total leverage ratio from 5.00 to 5.30 and decrease the interest coverage ratio from 2.25 to 2.15. The credit facility lending group is led by Wachovia Bank, N.A., as administrative agent.
"We appreciate the continued support of our bank group," said Andrew J. Kohut, Chesapeake president and chief executive officer. "Business conditions in our industry remain competitive, and we face short-term challenges. However, we are encouraged by several successes with new orders. We are also focused on exploring alternatives for non-core or redundant assets to improve our operating results and reduce debt."
Chesapeake Corporation protects and promotes the world's great brands as a leading international supplier of value-added specialty paperboard and plastic packaging. Headquartered in Richmond, Virginia, the company is one of Europe's premier suppliers of folding cartons, leaflets and labels, and plastic packaging for niche markets. Chesapeake has 47 locations in Europe, North America, Africa, and Asia and employs approximately 5500 people worldwide.
Source: Chesapeake Corporation
Web site: http://www.cskcorp.com/