Click here for Pulp & Paper Radio International
The Paperitalo Library
Free Downloads
My Profile
KapStone Completes Acquisition of MeadWestvaco's Charleston Kraft Division
Northbrook, Illinois, USA, 01 July 2008 -- /PRNewswire/ -- KapStone Paper and Packaging Corporation (NASDAQ:KPPC) today announced it has completed the acquisition of the Charleston Kraft Division (CKD)  of MeadWestvaco Corporation from MeadWestvaco Corporation (NYSE:MWV). Under the terms of the sale, KapStone acquired MWV's kraft paper mill in North Charleston, a lumber mill in Summerville, South Carolina, and chip mills located in Elgin, Hampton, Andrews, and Kinards, South Carolina, as well as 100% of Cogen South, LLC, the mill's on-site cogeneration facility. In 2007, the North Charleston mill produced 833,000 tons of saturating kraft, linerboard, and kraft folding carton board. MWV will continue to provide wood fiber for the North Charleston mill through a fiber supply agreement.

"The acquisition of the Charleston Kraft Division of MeadWestvaco Corporation is an important step for our company," said Roger W. Stone, chairman and chief executive officer of KapStone. "It expands our platform from which we intend to achieve our strategic vision. We are anxious to build on the success of this business while integrating it with our existing Kraft Papers Business. We will continue to explore other strategic acquisitions."

The USD 485 million base purchase price was adjusted to reflect estimated working capital and capital expenditure adjustments. As a result, KapStone paid MWV approximately USD 475 million in cash, subject to certain post-closing adjustments. Funding for the acquisition came from borrowing under a new USD 515 million senior secured credit facility announced on 12 June 2008 plus USD 40 million of borrowings from the issuance of senior notes.

KapStone expects to file a Current Report on Form 8-K in the near future that includes unaudited pro forma combined financial statements to reflect the acquisition of CKD.  Based on KapStone's and CKD's results for the year ended 31 December 2007, on a pro forma basis, the combined companies would have had net sales of approximately USD 779 million, net income of approximately USD 26 million, and adjusted EBITDA of approximately USD 119 million. Pro forma combined adjusted EBITDA represents the combined earnings before interest, income taxes, depreciation, and amortization of KapStone and CKD, eliminating a one-time non-cash purchase accounting adjustment for a KapStone 2007 inventory revaluation. A reconciliation between pro forma combined net income and pro forma combined adjusted EBITDA is provided in the table below. The pro forma combined results do not reflect anticipated cost savings and synergies.

Year Ended
31 December 2007
(In thousands)

Pro forma combined net income                                                USD 26,031
    Interest expense                                                                        USD 30,937
    Tax provision                                                                               USD 10,702
    Depreciation of amortization                                                    USD 49,644

Pro forma combined EBITDA (Non-GAAP)                             USD 117,314

    One-time non-cash charge for KapStone 2007 inventory
     revaluation                                                                                      USD 1526

Pro forma combined adjusted EBITDA (Non-GAAP)             USD 118,840 (1)

(1) For the year ended 31 December 2007, MWV Corporate allocated or charged to CKD USD 23,178 of expense included in cost of sales and selling, general, and administrative expenses. Kapstone anticipates that the annual costs to provide similar services for CKD will be approximately USD 19,700 less. These savings from the elimination of corporate allocations have been excluded as pro forma adjustments. All of these cost savings are expected to be realized on an annualized basis by the earlier of one year after the closing or the early termination of MWV transition services. The pro forma combined adjusted EBITDA does not include any one-time or transitional costs that may be incurred as CKD's operations and administrative support are transitioned to KapStone. No assurance can be given that these cost savings can be achieved in the amounts or during the periods predicted.

About the Company

Headquartered in Northbrook, Illinois, KapStone Paper and Packaging Corporation, is a leading North American producer of unbleached kraft paper grades and converter of inflatable dunnage bags. The business employs approximately 1750 people.

Source: KapStone Paper and Packaging Corporation  
Web site: http://www.kapstonepaper.com/

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: