Sept. 22, 2011
KapStone Paper and Packaging Corporation
(NYSE: KS) today announced that it has signed an agreement to acquire the stock of U.S. Corrugated, Inc. ("
in cash and 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.
operates a 240,000 ton recycled containerboard paper mill in
and 20 converting facilities in the eastern and mid-western
. Six of such operating facilities will be disposed of by
prior to the closing. Those facilities will remain under the management and control of
, 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
in net sales.
Chairman and Chief Executive Officer,
Roger W. Stone
, stated, "Acquiring USC is an outstanding opportunity for numerous reasons. 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 1. 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."
Mr. Stone further commented, "This acquisition will increase our exposure to the highly desirable containerboard segment. Also, we believe that because
is a net purchaser of 195,000 tons of containerboard that the risk of costly economic downtime will be mitigated throughout the economic cycle.
"KapStone is well-positioned to integrate
's operations and anticipates approximately
of Day 1 and first year redundancy expense eliminations. Additionally, operating synergies are expected to result in at least an additional
in profit improvement annually within the first 18 months."
Mr. Stone concluded, "Strategically, the acquisition of
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
senior secured credit facility. The new credit facility is expected to consist of a
revolving credit facility and a
term loan maturing over five years. At closing, a portion of the proceeds will be used to pay off KapStone's existing
The transaction is expected to close in late
KapStone will host a conference call at
8:30 a.m. ET
Friday, September 23, 2011
, to discuss the acquisition. All interested parties are invited to listen and may do so by either accessing a simultaneous broadcast webcast on KapStone's website,
, or for those unable to access the webcast, the following dial-in numbers are available:
Domestic: 800.561.2731International: 617.614.3528Participant Passcode: 34608823