KapStone Paper and Packaging Corporation recently announced that it has completed the stock purchase of Longview Fibre Paper and Packaging Inc. ("Longview"). Longview, headquartered in Longview, Wash., is a leading manufacturer of high-quality containerboard, lightweight high-performance multiwall paper, specialty Kraft papers and corrugated products. Longview employs about 1,800 people.

"Today we are welcoming Longview's team as the newest members of KapStone," states Roger W. Stone, chairman and chief executive officer. "The Longview team orchestrated a transformation that is truly, in my experience, the most amazing that I've actually ever seen in my 55 years in the industry. We're thrilled and delighted to officially have them with us."

Matt Kaplan, KapStone's president and chief operating officer, further states, "Longview continues to demonstrate their excellence by delivering outstanding results. In the second quarter, Longview's revenues and adjusted EBITDA of $228 million and $49 million, respectively, yielded an adjusted EBITDA margin of 20.7 per cent, one of the best in the industry. Even more notable was that they achieved these results despite incurring $4.3 million of expense for their once every five year planned mill maintenance outage performed in April. June was particularly strong as adjusted EBITDA for the month exceeded $19 million benefitting from the partial implementation in the quarter of the $50 per ton containerboard and associated box price increases."  

Funding for the acquisition came from borrowings under the $1.675 billion amended and restated senior secured credit facility led by Bank of America, Barclays Bank and Well Fargo Bank. The amended facility now consists of Term Loan A-1 of $805 million maturing over five years, Term Loan A-2 of $470 million maturing over 7 years with one per cent amortization in each of the first 6 years with the remaining principal due at the end of year seven, and a $400 million revolving credit facility. The initial blended interest rate will be 2.6 percent as determined from the LIBOR based pricing grid, and the rate is subject to change over the life of the loans as LIBOR rates and KapStone's debt to EBITDA ratio change.

Under the terms of Longview's existing $480 million, 8 percent senior secured notes, current noteholders will be notified shortly regarding redemption of the notes, including a 4 percent change of control penalty. The redemption is expected to take 30 days.