This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Packaging Corporation Of America Announces Completion Of $400 Million Senior Note Offering

Stocks in this article: PKG

Packaging Corporation of America (NYSE: PKG) announced today that the company has completed an underwritten public offering of $400 million of 3.90% senior notes due 2022.

The company also announced that it will redeem all of its existing $400 million of ten-year 5.75% senior notes due August 1, 2013 on July 26, 2012. The total cost to redeem the notes is expected to be approximately $432 million, including an estimated redemption premium of $21 million and accrued and unpaid interest through the redemption date of $11 million. The actual redemption premium will be calculated on July 23, 2012 in accordance with the terms of the redeemed notes. The company will fund the redemption with the proceeds received from the completed debt offering and cash on hand.

The company also paid $65.5 million to settle an interest rate protection agreement on the ten-year treasury rate, which the company entered into in August 2011, to protect against interest rate increases in connection with the anticipated refinancing of the 5.75% notes. In accordance with accounting rules, net payments of $56 million, from the settlement of interest rate protection agreements and refinancing fees and expenses, will be amortized as additional interest expense over the term of the new ten-year notes.

In connection with the debt offering and note redemption, the company expects to record a second quarter after-tax charge of $2 million, or $0.02 per share, and an estimated third quarter after-tax charge of $13 million, or $0.14 per share. Details of the amortized costs and the refinancing charges described above are included on the schedule attached to this release.

Commenting on the refinancing, Mark W. Kowlzan, Chief Executive Officer, said, “This transaction lowers PCA’s cash interest payments by approximately $7.4 million annually and greatly reduces financing risks and uncertainties through 2022.”

PCA is the fourth largest producer of containerboard and corrugated packaging products in the United States with sales of $2.6 billion in 2011. PCA operates four paper mills and 72 corrugated product plants in 26 states across the country.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs