NORTHBROOK, Ill., USA--July 1, 2008-- KapStone Paper and Packaging Corporation (Nasdaq: KPPC) has announced it has completed the acquisition of the Charleston Kraft Division of MeadWestvaco Corporation (CKD) 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, SC and chip mills located in Elgin, Hampton, Andrews and Kinards, SC, as well as 100 percent 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."
"We are very excited about the acquisition of the CKD," added Matt Kaplan, President of KapStone. "The Charleston mill has been successful in creating a strong global business based on long-term customer relationships resulting from outstanding quality and service. We believe the business is well positioned for the future."
The $485 million base purchase price was adjusted to reflect estimated working capital and capital expenditure adjustments. As a result, KapStone paid MWV approximately $475 million in cash, subject to certain post-closing adjustments. Funding for the acquisition came from borrowing under a new $515 million senior secured credit facility announced on June 12, 2008 plus $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 December 31, 2007, on a pro forma basis, the combined companies would have had net sales of approximately $779 million, net income of approximately $26 million and adjusted EBITDA of approximately $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.
SOURCE KapStone Paper and Packaging Corporation
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"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."
"We are very excited about the acquisition of the CKD," added Matt Kaplan, President of KapStone. "The Charleston mill has been successful in creating a strong global business based on long-term customer relationships resulting from outstanding quality and service. We believe the business is well positioned for the future."
The $485 million base purchase price was adjusted to reflect estimated working capital and capital expenditure adjustments. As a result, KapStone paid MWV approximately $475 million in cash, subject to certain post-closing adjustments. Funding for the acquisition came from borrowing under a new $515 million senior secured credit facility announced on June 12, 2008 plus $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 December 31, 2007, on a pro forma basis, the combined companies would have had net sales of approximately $779 million, net income of approximately $26 million and adjusted EBITDA of approximately $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.
SOURCE KapStone Paper and Packaging Corporation
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