| PAPER INDUSTRY NEWS - JULY 2002 |
This page contains pulp and paper industry news for July 2002
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NEWS JULY 2002
Cascades Sells its Retail Egg Carton Business to Hartmann
KINGSEY FALLS, Quebec, July 8, 2002 - Cascades Inc. said that it has signed an agreement with Brodrene Hartmann A/S to sell all of its retail egg carton activities in Canada and the United States.
According to Cascades, the deal will enable the Danish company to become the second largest supplier of moulded-fiber egg cartons in North America.
Under the terms of the deal, Cascades will sell all of the equipment, working capital and goodwill of its Brantford, Ontario plant as well as the goodwill of its unit located in Thorndike, Massachusetts.
After a transition period, the egg packaging production of the Brantford operation will be transferred to a new plant, also in Brantford, which is currently being established by Hartmann.
Cascades said that current employees of the Brantford plant will be transferred to the new operation over a period of two years in step with the starting up of production activities. By 2004, it is estimated that the Hartmann operations in Brantford will employ 200 people and produce over 400 million egg cartons per year. Hartmann's new plant will initially not add capacity to the North American market place.
The Thorndike tangible assets will remain under Cascades' ownership and their retail egg packaging production will be solely dedicated to Hartmann.
About Brodrene Hartmann
Brodrene Hartmann A/S is one of the world's largest producers of moulded- fiber
packaging, manufactured on the basis of recycled paper. The Group has production
sites, sales companies and offices in Europe, the Middle East, South America,
North America and Asia. Hartmann has developed its own technology and sells
machinery for production of moulded-fiber packaging. In 2001, Hartmann had a
turnover of DKK 1,422 million and about 2,100 employees.
SOURCE: Cascades Inc.
Caraustar Industries to Acquire Smurfit's Tube and Core Business
July 22, 2002 - Caraustar Industries, Inc. said that it has entered into a definitive agreement with a subsidiary of Smurfit-Stone Container Corporation (Nasdaq: SSCC) to acquire substantially all the assets (excluding accounts receivable) of Smurfit's Industrial Packaging Group business for a purchase price of approximately $79.8 million. Caraustar expects the acquisition to be accretive to Caraustar's earnings in the fourth quarter of 2002 in a range of $0.03 to $0.04 per share and for the full year 2003 in a range of $0.20 to $0.25 per share.
The Smurfit business consists of 17 paper tube and core plants, 3 uncoated recycled paperboard mills and 3 partition manufacturing plants located in 16 states across the U.S. and in Canada. The Smurfit business had 2001 annual sales of approximately $138 million excluding intradivisional sales.
The three paperboard mills shipped approximately 118 thousand tons of uncoated recycled boxboard in 2001, of which 55 thousand tons were used by the paper tube and core converting facilities, 24 thousand tons were shipped to other Smurfit operations and 40 thousand tons were shipped to external customers.
The converting facilities consumed approximately 125 thousand tons of uncoated recycled boxboard, of which 55 thousand tons were supplied by the three Smurfit mills, with the balance purchased from external suppliers. In accordance with the terms of long-term supply agreements, Caraustar will supply Smurfit with tubes and cores and uncoated recycled boxboard that are currently supplied internally.
The acquisition is subject to various conditions, including expiration or early termination of the pre-merger notification period under the Hart-Scott- Rodino Act, and is expected to close on or before August 22, 2002.
Thomas V. Brown, president and chief executive officer of Caraustar, commented, "Smurfit's tube and core business is an excellent strategic acquisition in a business in which we have extensive experience and competence. These new facilities will expand our presence in the Midwest and West Coast regions and substantially improve Caraustar's ability to serve customers throughout North America."
Brown added, "Caraustar expects to achieve significant synergies from this acquisition. Caraustar will continue to operate the acquired uncoated paperboard mills located in Tacoma, WA, Lafayette, IN and Cedartown, GA. In addition, existing Caraustar mill locations will begin supplying approximately 31 thousand tons annually of uncoated recycled boxboard that Smurfit has been purchasing from other third parties. This additional tonnage should allow Caraustar to increase its uncoated mill capacity utilization rate to approximately 100 percent and generate over $1.5 million of incremental EBITDA by this year's fourth quarter and over $6 million in 2003.
"The integration of Smurfit and Caraustar's tube and core operations will also provide potential synergies from economies of scale and facility consolidation that should generate an additional $6 million annually in incremental EBITDA by the end of 2003. Caraustar will record an acquisition liability of approximately $5 million in expected costs associated with the anticipated closing of several facilities.
"Caraustar currently has sufficient cash on hand to pay for the acquisition. Alternatively, we may fund a portion of this purchase price from our undrawn $75 million bank credit facility or access the long-term debt markets on an opportunistic basis."
SOURCE: Caraustar Industries
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