KapStone Paper to acquire U.S. Corrugated
KapStone Paper and Packaging Corporation has
announced that it has signed an agreement to acquire the stock
of U.S. Corrugated, Inc. (USC) for $330 million 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.
USC operates a 240,000 ton recycled containerboard paper mill
in Cowpens, South Carolina and 20 converting facilities in the
eastern and mid-western United States. Six of such operating
facilities will be disposed of by USC prior to 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. In 2010, the operations to be acquired from
USC generated $423 million in net sales.
Chairman and chief executive officer, Roger W. Stone, stated,
“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
Stone concluded, “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 $525 million senior secured credit facility.
The new credit facility is expected to consist of a $150 million
revolving credit facility and a $375 million term loan maturing
over five years. At closing, a portion of the proceeds will be
used to pay off KapStone’s existing $101 million term loan.