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SECURITIES AND EXCHANGE COMMISSION
Exchange Act of 1934 (Amendment No. )
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
þ | No fee required. | |
(Pursuant to Rule 14a-6(j) under the Exchange Act, Registration Statement of Form S-4 of New Giant Corporation, filed on August 31, 2007) | ||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which transaction applies: | ||
(2) | Aggregate number of securities to which transaction applies: | ||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||
(4) | Proposed maximum aggregate value of transaction: | ||
(5) | Total fee paid: | ||
o | Fee paid previously with preliminary materials. | |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: | ||
(2) | Form, Schedule or Registration Statement No.: | ||
(3) | Filing Party: | ||
(4) | Date Filed: | ||
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• | Merger Sub, a new, wholly-owned subsidiary of New Graphic, will merge with and into Graphic, as a result of which Graphic will become a wholly-owned subsidiary of New Graphic (the “merger”); | |
• | each share of Graphic common stock outstanding immediately prior to the merger will be converted into the right to receive one share of the common stock of New Graphic pursuant to the merger; and | |
• | immediately after the merger, the Sellers will transfer all of their equity interests in BCH, the company that holds all of the equity interests in Altivity Packaging, LLC, to New Graphic in exchange for shares of common stock of New Graphic (the “exchange,” and together with the merger, the “transactions”). |
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ANNEXES | ||||
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Q: | When and where is the special meeting? |
A: | The special meeting will take place on January 17, 2008, at 10:00 a.m., local time, at the offices of Alston & Bird LLP, Atlantic Center Plaza, 1180 West Peachtree Street, 15th Floor, Atlanta, Georgia 30309. |
Q: | What am I being asked to vote on? | |
A: | You are being asked to vote to adopt the transaction agreement and agreement and plan of merger, dated as of July 9, 2007 (the “transaction agreement”), by and among Graphic, Bluegrass Container Holdings, LLC (“BCH”), the company that holds all of the equity interests in Altivity Packaging, LLC (“Altivity”), TPG Bluegrass IV, L.P., TPG Bluegrass IV-AIV 2, L.P., TPG Bluegrass V, L.P., TPG Bluegrass V-AIV 2, L.P., TPG FOF V-A, L.P., TPG FOF V-B, L.P. (collectively with TPG Bluegrass IV, L.P., TPG Bluegrass IV-AIV 2, L.P., TPG Bluegrass V, L.P., TPG Bluegrass V-AIV 2, L.P. and TPG FOF V-A, L.P., the “TPG Entities”), BCH Management, LLC, Field Holdings, Inc. (together with BCH Management, LLC, the TPG Entities, and any transferee of their interests in BCH, the “Sellers”), New Giant Corporation (“New Graphic”) and Giant Merger Sub, Inc. (“Merger Sub”) and approve the transactions. The transaction agreement contemplates, among other transactions, that: | |
• Merger Sub, a new, wholly-owned subsidiary of New Graphic, will merge with and into Graphic, as a result of which Graphic will become a wholly-owned subsidiary of New Graphic (the “merger”); | ||
• each share of Graphic common stock outstanding immediately prior to the merger will be converted into the right to receive one share of the common stock of New Graphic pursuant to the merger; and | ||
• immediately after the merger, the Sellers will transfer all of their equity interests in BCH to New Graphic in exchange for shares of common stock of New Graphic (the “exchange”). | ||
Upon the completion of the transactions, Graphic stockholders, in the aggregate, will hold approximately 59.4%, and the Sellers will hold approximately 40.6%, of the outstanding common stock of New Graphic, each calculated on a fully diluted basis. | ||
For a more detailed discussion about the transactions, please see “The Transactions” beginning on page 33 and “The Transaction Agreement and Agreement and Plan of Merger” beginning on page 62. | ||
You are also being asked to vote to approve a provision in New Graphic’s restated certificate of incorporation authorizing 1.1 billion shares of capital stock, including 1 billion shares of common stock and 100 million shares of preferred stock. | ||
In addition, you are being asked to vote to approve any proposal by Graphic to adjourn or postpone the special meeting, if determined to be necessary. | ||
Q: | What will I receive after the transactions are completed? | |
A: | After the transactions are completed, you will receive one share of New Graphic common stock for each share of Graphic common stock you hold. |
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Q: | Are there any important risks related to the transactions or New Graphic’s business of which I should be aware? | |
A: | Yes, there are important risks involved. Before making any decision on whether and how to vote, Graphic urges you to read carefully and in its entirety the section entitled “Risk Factors” beginning on page 20. | |
Q: | Will my rights as a stockholder of New Graphic be different from my rights as a stockholder of Graphic? | |
A: | Yes, there are certain material differences between your rights as a stockholder of Graphic and your rights as a stockholder of New Graphic. We urge you to read the section entitled “Description of New Graphic Capital Stock” beginning on page 133 and “Comparison of Rights of Graphic Stockholders and New Graphic Stockholders” beginning on page 140. | |
Q: | What stockholder approvals are needed to approve the transactions? | |
A: | The adoption of the transaction agreement and the approval of the transactions and the approval of the provision in New Graphic’s restated certificate of incorporation each requires the affirmative vote of a majority of the issued and outstanding shares of Graphic common stock as of the record date. | |
Pursuant to the voting agreement, dated as of July 9, 2007, entered into by and among BCH, Graphic, certain members and affiliates of the Coors family (the “Coors Family Stockholders”), Clayton, Dubilier & Rice Fund V Limited Partnership (the “CDR Fund”) and EXOR Group S.A. (“EXOR”), each of the Coors Family Stockholders, the CDR Fund and EXOR has agreed, subject to limited exceptions, to vote all of its shares of Graphic common stock in favor of adopting the transaction agreement and approving the transactions and any other action reasonably requested by BCH in furtherance thereof. The Coors Family Stockholders, the CDR Fund and EXOR collectively hold 129,376,414 issued and outstanding shares of Graphic common stock, which represented approximately 65% of the total number of shares of Graphic common stock issued and outstanding as of July 9, 2007 and as of the record date. | ||
Q: | Who is entitled to vote at the special meeting? |
A: | Graphic stockholders as of the close of business on December 7, 2007, which is the record date for the special meeting, are entitled to vote at the special meeting. As of the record date, there were 200,978,569 shares of Graphic common stock issued and outstanding and entitled to be voted at the special meeting. Each share of Graphic common stock outstanding on the record date will entitle its holder of record on such date to one vote on the transaction agreement and the transactions. |
Q: | Who can attend the special meeting? | |
A: | Only stockholders, their designated proxies and guests of Graphic may attend the special meeting. If you plan to attend the special meeting, you must be a stockholder of record as of December 7, 2007 or, if you have beneficial ownership of shares of Graphic common stock held of record by a broker, bank or other nominee, you must bring an account statement or letter from your broker, bank or other nominee showing that you are the beneficial owner of shares of Graphic common stock as of the record date in order to be admitted to the special meeting. | |
Q: | What happens if I sell my shares of Graphic common stock before the special meeting? | |
A: | The record date for the special meeting is December 7, 2007. If you transfer your shares of Graphic common stock after the record date but before the special meeting, you will retain your right to vote at the special meeting but will transfer the right to receive one share of New Graphic common stock for each share of Graphic common stock you hold (if the transactions are completed) to the person to whom you transfer your shares. | |
Q: | If I would like to submit a proxy, what do I need to do now? | |
A: | If your shares are registered directly in your name at Graphic’s transfer agent, you are considered a stockholder of record and you may submit your proxy (i) by mail by completing, signing, dating and returning the enclosed proxy card by mailing it in the enclosed postage prepaid envelope provided for |
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receipt prior to the date of the special meeting or (ii) by telephone or through the Internet until 12:00 p.m. Central Time on January 16, 2008. Instructions for voting by telephone or through the Internet are contained on the enclosed proxy card. Please submit your proxy as soon as possible so that your shares may be represented at the special meeting. |
Q: | If my shares are held in “street name” by a broker, bank or other nominee, will my broker, bank or other nominee vote my shares for me? | |
A: | If your shares are registered through a broker, bank or other nominee, your shares are considered to be held beneficially in street name. Your broker, bank or other nominee will vote your shares for you only if you provide instructions to it on how to vote. You should follow the directions your broker, bank or other nominee provides on how to instruct it to vote your shares. If your broker, bank or other nominee holds your shares and you wish to vote your shares in person at the special meeting, please bring an account statement or a letter from your broker, bank or other nominee identifying you as the beneficial owner of the shares as of the record date and granting you a proxy to vote those shares at the special meeting. | |
Q: | What do I do if I want to change my vote or vote in person? | |
A: | You may revoke your vote at any time before the special meeting by: | |
• executing and submitting a revised proxy (including by telephone or over the Internet); | ||
• sending written notice of revocation to Graphic’s Secretary at the address provided at the beginning of this proxy statement/prospectus; or | ||
• voting in person at the meeting. | ||
If your shares are registered directly in your name, you are considered the stockholder of record and you may vote in person at the special meeting. If your shares are held beneficially in street name and you wish to vote in person at the special meeting, you will need to obtain a proxy from the broker, bank or other nominee that holds your shares. Please note that even if you plan to attend the special meeting, Graphic recommends that you submit your proxy card voting your shares before the special meeting in case you later decide not to attend the meeting. | ||
Q: | What will happen if I do not send in my proxy or if I abstain from voting? | |
A: | If you do not send in your proxy or if you abstain from voting, it will have the effect of a vote “AGAINST” the adoption of the transaction agreement and the approval of the transactions, and “AGAINST” the approval of the provisions in New Graphic’s restated certificate of incorporation increasing the authorized capital stock of New Graphic. If you do not send in your proxy it will not affect the proposal to adjourn or postpone the special meeting, if determined to be necessary. If you return your proxy, but mark “abstain,” it will have the effect of a vote “AGAINST” the proposal to adjourn or postpone the special meeting, if determined to be necessary. | |
Q: | Should I send in my stock certificates now? | |
A: | No. If the transactions are completed and you hold stock certificates evidencing your shares of Graphic common stock, New Graphic will send you written instructions for exchanging your Graphic stock certificates. | |
Q: | How will Graphic solicit proxies? | |
A: | Proxies may be solicited by mail or facsimile, or by Graphic’s directors, officers or employees, without extra compensation, in person or by telephone. Graphic will reimburse brokers, banks and other nominees for their reasonable out-of-pocket expenses for forwarding solicitation material to the beneficial owners of Graphic common stock. |
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Q: | Who can help answer my questions? | |
A: | If you have any questions about the special meeting or the transaction agreement or the transactions, or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card, you may contact: | |
Graphic Packaging Corporation 814 Livingston Court Marietta, Georgia 30067 (770) 644-3000 Attention: Investor Relations Department |
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• | The Graphic board of directors believed that the combination of the operations of Graphic and Altivity would provide stronger and more stable cash flows, and therefore greater financial stability, than could have been achieved by Graphic on a stand-alone basis. This enhanced financial performance and position should permit New Graphic to accelerate its debt reduction, enhance the company’s credit profile, improve leverage ratios and finance ongoing investments. | |
• | The complementary product offerings of Graphic and Altivity, which when combined create an ability to offer comprehensive consumer packaging solutions to existing and new customers of both companies. | |
• | The new company will have expanded market reach into smaller specialty segments of the folding carton market, as well as new packaging markets, including labels, flexible packaging and multi-wall bags. | |
• | The opportunity to achieve significant cost synergies identified in connection with the transactions, including: |
– | operating and overhead expense reductions; | |
– | supply chain procurement improvements; | |
– | facility optimization; and | |
– | manufacturing process improvements. |
• | The opportunity for additional cost savings from Altivity’s ongoing integration of Smurfit-Stone Container Corporation’s Consumer Packaging Division and the Field Companies (as defined below) as a result of manufacturing network optimization efforts, overhead reduction and supply chain improvements. |
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• | The ability to offer a tax-free transaction to Altivity’s current owners by structuring the transactions under the federal income tax laws as a contribution by Graphic and BCH of their respective businesses to New Graphic. | |
• | The opinion of Goldman Sachs, dated July 9, 2007, provided to the Graphic board of directors, that, as of the date of the opinion, and based upon and subject to the factors and assumptions set forth in the opinion, the 139,445,038 shares of New Graphic common stock, taken in the aggregate, to be issued by New Graphic in exchange for 100% of the outstanding equity interests in BCH pursuant to the transaction agreement was fair from a financial point of view to Graphic, as more fully described below under “The Transactions — Opinion of Financial Advisor to Graphic.” |
• | the adoption of the transaction agreement and the approval of the transactions by Graphic stockholders; |
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• | no law, order or judgment having been issued, enacted, entered or enforced by any court or other governmental authority preventing or making illegal the consummation of the transactions; | |
• | the expiration or termination of any waiting period applicable to the transactions in respect of filings by Graphic and BCH under theHart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). | |
• | the approval of the listing on the NYSE of New Graphic common stock to be issued in connection with the transactions; | |
• | the registration statement of which this proxy statement/prospectus forms a part shall have become effective under the Securities Act of 1933, as amended (the “Securities Act”) and shall not be the subject of any stop order or proceedings seeking a stop order; and | |
• | other customary conditions set forth in the transaction agreement, including the receipt of tax opinions, the accuracy of the representations and warranties, and the performance of obligations under the transaction agreement having been satisfied or waived. |
• | by mutual consent of the Sellers Representative (as defined herein) and Graphic; | |
• | by either the Sellers Representative or Graphic if: |
– | any governmental law or order prohibiting the completion of the transactions becomes final; | |
– | the transactions have not been completed by March 31, 2008 (which date may be extended to May 31, 2008 if the delay is the result of the failure to obtain antitrust approvals); |
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– | Graphic stockholders fail to adopt the transaction agreement and approve the transactions at the special meeting; or | |
– | there shall have been a breach by the other party of any of the covenants, agreements, representations or warranties of such other party contained in the transaction agreement in a material way; or |
• | by the Sellers Representative if the Graphic board of directors (i) changes its recommendation regarding the transaction agreement and the transactions or (ii) fails to publicly reaffirm its recommendation regarding the transaction agreement and the transactions or if Graphic otherwise breaches certain provisions of the transaction agreement relating to its obligations not to solicit alternative takeover proposals. |
• | The closing of a new $1.2 billion senior secured term loan facility to refinance the outstanding amounts under BCH’s existing first and second lien credit facilities. |
• | The closing of an increase to the existing revolving credit facility to $400 million from $300 million. |
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Nine Months Ended | ||||||||||||||||||||||||||||
September 30, | Years Ended December 31, | |||||||||||||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | 2003(a) | 2002 | ||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
In millions, except per share amounts | ||||||||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||||||
Net Sales | $ | 1,819.3 | $ | 1,756.0 | $ | 2,321.7 | $ | 2,294.3 | $ | 2,295.5 | $ | 1,591.6 | $ | 1,170.8 | ||||||||||||||
Cost of Sales | 1,555.6 | 1,521.5 | 2,020.6 | 1,985.9 | 1,944.6 | 1,319.2 | 921.3 | |||||||||||||||||||||
Selling, General and Administrative | 141.5 | 147.4 | 197.0 | 203.0 | 198.4 | 149.4 | 114.2 | |||||||||||||||||||||
Research, Development and Engineering | 6.7 | 8.3 | 10.8 | 9.2 | 8.7 | 6.6 | 4.5 | |||||||||||||||||||||
Other Expense (Income), Net | 2.1 | 0.4 | (0.5 | ) | 9.7 | 32.2 | 17.7 | (0.6 | ) | |||||||||||||||||||
Income from Operations | 113.4 | 78.4 | 93.8 | 86.5 | 111.6 | 98.7 | 131.4 | |||||||||||||||||||||
Interest Income | 0.3 | 0.5 | 0.6 | 0.6 | 0.5 | 0.9 | 1.3 | |||||||||||||||||||||
Interest Expense | (127.8 | ) | (127.8 | ) | (172.0 | ) | (156.4 | ) | (148.1 | ) | (143.7 | ) | (146.8 | ) | ||||||||||||||
Loss of Early Extinguishment of Debt | (9.5 | ) | — | — | — | — | (45.3 | ) | (11.5 | ) | ||||||||||||||||||
Loss before Income Taxes and Equity in Net Earnings of Affiliates | (23.6 | ) | (48.9 | ) | (77.6 | ) | (69.3 | ) | (36.0 | ) | (89.4 | ) | (25.6 | ) | ||||||||||||||
Income Tax Expense | (19.1 | ) | (15.3 | ) | (20.8 | ) | (22.0 | ) | (28.6 | ) | (12.7 | ) | (30.9 | ) | ||||||||||||||
Loss before Equity in Net Earnings of Affiliates | (42.7 | ) | (64.2 | ) | (98.4 | ) | (91.3 | ) | (64.6 | ) | (102.1 | ) | (56.5 | ) | ||||||||||||||
Equity in Net Earnings of Affiliates | 0.7 | 0.8 | 1.0 | 1.2 | 1.4 | 1.4 | 1.0 | |||||||||||||||||||||
Loss from Continuing Operations | (42.0 | ) | (63.4 | ) | (97.4 | ) | (90.1 | ) | (63.2 | ) | (100.7 | ) | (55.5 | ) | ||||||||||||||
(Loss) Income from Discontinued Operations, Net of Taxes | (31.9 | ) | (1.2 | ) | (3.1 | ) | (1.0 | ) | �� | 2.3 | 5.0 | 6.5 | ||||||||||||||||
Net Loss | (73.9 | ) | (64.6 | ) | (100.5 | ) | (91.1 | ) | (60.9 | ) | (95.7 | ) | (49.0 | ) | ||||||||||||||
Loss Per Share — Basic: | ||||||||||||||||||||||||||||
Continuing Operations | (0.21 | ) | (0.31 | ) | (0.48 | ) | (0.45 | ) | (0.32 | ) | (0.68 | ) | (0.48 | ) | ||||||||||||||
Discontinued Operations | (0.16 | ) | (0.01 | ) | (0.02 | ) | (0.01 | ) | 0.01 | 0.03 | 0.05 | |||||||||||||||||
Total | (0.37 | ) | (0.32 | ) | (0.50 | ) | (0.46 | ) | (0.31 | ) | (0.65 | ) | (0.43 | ) | ||||||||||||||
Loss Per Share — Diluted: | ||||||||||||||||||||||||||||
Continuing Operations | (0.21 | ) | (0.31 | ) | (0.48 | ) | (0.45 | ) | (0.32 | ) | (0.68 | ) | (0.48 | ) | ||||||||||||||
Discontinued Operations | (0.16 | ) | (0.01 | ) | (0.02 | ) | (0.01 | ) | 0.01 | 0.03 | 0.05 | |||||||||||||||||
Total | (0.37 | ) | (0.32 | ) | (0.50 | ) | (0.46 | ) | (0.31 | ) | (0.65 | ) | (0.43 | ) | ||||||||||||||
Weighted Average Shares Outstanding: | ||||||||||||||||||||||||||||
Basic | 201.7 | 200.5 | 201.1 | 200.0 | 198.9 | 148.3 | 115.1 | |||||||||||||||||||||
Diluted | 201.7 | 200.5 | 201.1 | 200.0 | 198.9 | 148.3 | 115.1 |
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Nine Months Ended | ||||||||||||||||||||||||||||
September 30, | Years Ended December 31, | |||||||||||||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | 2003(a) | 2002 | ||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
In millions, except per share amounts | ||||||||||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||||||||
Cash and Cash Equivalents | 10.2 | 4.9 | 7.3 | 12.7 | 7.3 | 17.5 | 13.8 | |||||||||||||||||||||
Total Assets | 3,187.7 | 3,307.5 | 3,233.6 | 3,356.0 | 3,465.3 | 3,612.0 | 2,251.2 | |||||||||||||||||||||
Total Debt | 1,949.7 | 1,977.2 | 1,922.7 | 1,978.3 | 2,025.2 | 2,154.6 | 1,528.4 | |||||||||||||||||||||
Total Shareholders’ Equity | 125.3 | 214.1 | 181.7 | 268.7 | 386.9 | 438.4 | 87.8 | |||||||||||||||||||||
Other Data: | ||||||||||||||||||||||||||||
Depreciation and Amortization | 144.6 | 141.9 | 188.5 | 198.8 | 223.1 | 154.6 | 129.0 | |||||||||||||||||||||
Capital Spending(b) | 61.6 | 63.8 | 94.5 | 110.8 | 149.1 | 136.6 | 56.0 |
(a) | Graphic (formerly known as Riverwood Holding, Inc.) was incorporated on December 7, 1995 under the laws of the State of Delaware. On August 8, 2003, the corporation formerly known as Graphic Packaging International Corporation (“GPIC”) merged with and into Riverwood Acquisition Sub LLC, a wholly-owned subsidiary of Riverwood Holding, Inc. (“Riverwood Holding”), with Riverwood Acquisition Sub LLC as the surviving entity. Riverwood Acquisition Sub LLC then merged into Riverwood Holding, which was renamed Graphic Packaging Corporation. |
(b) | Includes capitalized interest and amounts invested in packaging machinery. |
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Successor | |||||||||||||||||||||||||||||
Three | Predecessor | ||||||||||||||||||||||||||||
Successor | Months | July 1, | January 1, | ||||||||||||||||||||||||||
Nine Months Ended | Ended | 2006 to | 2006 to | ||||||||||||||||||||||||||
September 30, | September | December 31, | June 30, | Years Ended December 31, | |||||||||||||||||||||||||
2007 | 30, 2006 | 2006 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||||||||||
In millions | |||||||||||||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||||||||||||
Net Sales | $ | 1,527.7 | $ | 463.0 | $ | 964.2 | $ | 789.4 | $ | 1,584.4 | $ | 1,541.2 | $ | 1,520.2 | |||||||||||||||
Cost of Sales | 1,321.8 | 416.0 | 881.3 | 699.0 | 1,381.1 | 1,338.2 | 1,316.8 | ||||||||||||||||||||||
Selling, General and Administrative | 141.5 | 37.0 | 89.7 | 75.4 | 141.0 | 137.9 | 136.5 | ||||||||||||||||||||||
Litigation Charge | — | — | — | — | 4.0 | — | — | ||||||||||||||||||||||
Restructuring Charges | — | — | — | — | 5.0 | 1.9 | 10.8 | ||||||||||||||||||||||
Loss (Gain) on Sale of Assets | (0.1 | ) | — | — | (0.1 | ) | (0.1 | ) | 0.1 | 0.1 | |||||||||||||||||||
Gain on Insurance Claim | (1.3 | ) | — | — | — | — | — | — | |||||||||||||||||||||
Income (Loss) from Operations | 65.8 | 10.0 | (6.8 | ) | 15.1 | 53.4 | 63.1 | 56.0 | |||||||||||||||||||||
Interest Expense, Net | (71.6 | ) | (22.0 | ) | (45.8 | ) | (0.6 | ) | (1.2 | ) | (0.9 | ) | (0.8 | ) | |||||||||||||||
Other (Expense) Income, Net | (0.5 | ) | 1.0 | (0.4 | ) | — | 0.1 | 0.2 | 0.4 | ||||||||||||||||||||
Income (Loss) before Income Taxes and Cumulative Effect of Accounting Change | (6.3 | ) | (11.0 | ) | (53.0 | ) | 14.5 | 52.3 | 62.4 | 55.6 | |||||||||||||||||||
Income Tax Expense | (1.6 | ) | (0.3 | ) | (0.5 | ) | (5.8 | ) | (20.9 | ) | (24.8 | ) | (22.1 | ) | |||||||||||||||
Income (Loss) before Cumulative Effect of Accounting Change | (7.9 | ) | (11.3 | ) | (53.5 | ) | 8.7 | 31.4 | 37.6 | 33.5 | |||||||||||||||||||
Cumulative Effect of Accounting Change | — | — | — | — | — | — | (0.1 | ) | |||||||||||||||||||||
Net (Loss) Income | (7.9 | ) | (11.3 | ) | (53.5 | ) | 8.7 | 31.4 | 37.6 | 33.4 | |||||||||||||||||||
Balance Sheet Data: | |||||||||||||||||||||||||||||
Cash and Cash Equivalents | 85.9 | 77.3 | 99.2 | — | — | — | 0.1 | ||||||||||||||||||||||
Total Assets | 1,679.8 | 1,764.2 | 1,671.2 | 836.0 | 821.8 | 841.8 | 830.1 | ||||||||||||||||||||||
Total Debt | 1,157.0 | 1,165.5 | 1,163.3 | 17.0 | 16.9 | 17.6 | 10.6 | ||||||||||||||||||||||
Total Equity | 232.5 | 332.5 | 244.5 | 615.0 | 576.6 | 587.9 | 596.3 | ||||||||||||||||||||||
Other Data: | |||||||||||||||||||||||||||||
Depreciation and Amortization | 67.7 | 17.7 | 42.5 | 20.4 | 40.4 | 39.5 | 36.8 | ||||||||||||||||||||||
Capital Spending | 53.8 | 8.9 | 21.4 | 39.0 | 37.9 | 31.5 | 37.8 | ||||||||||||||||||||||
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Nine Months Ended | Year Ended | |||||||
September 30, | December 31, | |||||||
2007 | 2006 | |||||||
In millions, except per share data | ||||||||
Statement of Operations Information | ||||||||
Net Sales | $ | 3,314.5 | $ | 4,273.0 | ||||
Income from Operations | 154.7 | 74.4 | ||||||
Loss per Basic and Diluted Share | (0.17 | ) | (0.44 | ) | ||||
Balance Sheet Information | ||||||||
Cash and Cash Equivalents | 10.2 | |||||||
Total Assets | 5,256.9 | |||||||
Total Debt | 3,064.8 | |||||||
Total Shareholders’ Equity | 787.0 |
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As of and for the | ||||||||
Nine Months | As of and for the | |||||||
Ended | Year Ended | |||||||
September 30, | December 31, | |||||||
2007 | 2006 | |||||||
(Unaudited) | ||||||||
Basic earnings per share — Continuing Operations | ||||||||
Historical | $ | (0.21 | )(1) | $ | (0.48 | )(2) | ||
Pro forma | (0.17 | ) | (0.44 | ) | ||||
Diluted earnings per share — Continuing Operations | ||||||||
Historical | (0.21 | )(1) | (0.48 | )(2) | ||||
Pro forma | (0.17 | ) | (0.44 | ) | ||||
Dividends per share | ||||||||
Historical | — | — | ||||||
Pro forma | — | — | ||||||
Book value per share | ||||||||
Historical | 0.62 | 0.91 | ||||||
Pro forma | 2.30 | — |
(1) | Amounts derived from Graphic’s unaudited condensed consolidated financial statements as of, and for the nine months ended September 30, 2007. |
(2) | Amounts derived from Graphic’s audited consolidated financial statements as of, and for the year ended December 31, 2006. |
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High | Low | |||||||
2007 | ||||||||
First Quarter | $ | 6.04 | $ | 4.11 | ||||
Second Quarter | $ | 5.40 | $ | 4.52 | ||||
Third Quarter | $ | 6.10 | $ | 4.07 | ||||
Fourth Quarter (through December 7, 2007) | $ | 4.97 | $ | 3.78 | ||||
2006 | ||||||||
First Quarter | $ | 3.00 | $ | 1.94 | ||||
Second Quarter | $ | 4.09 | $ | 2.09 | ||||
Third Quarter | $ | 4.09 | $ | 3.20 | ||||
Fourth Quarter | $ | 4.57 | $ | 3.45 | ||||
2005 | ||||||||
First Quarter | $ | 7.42 | $ | 4.26 | ||||
Second Quarter | $ | 4.63 | $ | 2.98 | ||||
Third Quarter | $ | 3.97 | $ | 2.72 | ||||
Fourth Quarter | $ | 3.04 | $ | 2.09 |
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The anticipated benefits of combining the operations of Graphic and Altivity may not be realized, and New Graphic may face difficulties integrating Altivity’s operations. |
• | inconsistencies in standards, systems and controls; | |
• | the diversion of management’s focus and resources from ordinary business activities and opportunities; | |
• | difficulties in achieving expected cost savings associated with the transactions; | |
• | difficulties in the assimilation of employees and in creating a unified corporate culture; | |
• | challenges in retaining existing customers and obtaining new customers; and | |
• | challenges in attracting and retaining key personnel. |
Graphic and Altivity will be subject to business uncertainties and contractual restrictions in advance of the transactions, which could have a material adverse effect on their businesses. |
The failure to complete the transactions could cause Graphic to incur significant fees and expenses and could lead to negative perceptions among investors, potential investors and customers. |
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Graphic may waive one or more of the conditions to the transaction agreement that is important to you without your approval. |
The transactions are subject to various regulatory approvals, approval by Graphic stockholders and other customary closing conditions prior to consummation. |
Certain directors and executive officers of Graphic may have interests in the transactions different from, or in addition to, the interests of other stockholders of Graphic. |
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Neither New Graphic nor its stockholders will have the protection of any indemnification, escrow, price adjustment or other provisions that allow for a post-closing adjustment to be made to the transaction consideration in the event that any of the representations and warranties made by BCH or the Sellers in the transaction agreement ultimately proves to be inaccurate or incorrect. |
New Graphic will have significant debt that could negatively impact its business, and its credit ratings are anticipated to be less than investment grade. |
• | debt outstanding under New Graphic’s credit agreement, as amended or amended and restated in connection with the transactions, which is expected to include term loans in an aggregate outstanding principal amount at the time of the consummation of the transactions equal to $2.2 billion and revolving loans in an aggregate outstanding principal amount equal to approximately $8 million; |
• | $425 million of 8.5% Senior Notes; | |
• | $425 million of 9.5% Senior Subordinated Notes; and |
• | approximately $10.2 million of other debt. |
• | make it difficult to satisfy its financial obligations, including debt service requirements; | |
• | limit its ability to obtain additional financing to operate its business; | |
• | limit its financial flexibility in planning for and reacting to business and industry changes; | |
• | impact the evaluation of its creditworthiness by counterparties to commercial agreements; | |
• | place it at a competitive disadvantage compared to less leveraged companies; | |
• | increase its vulnerability to general adverse economic and industry conditions, including changes in interest rates and volatility in commodity prices; and | |
• | require it to dedicate a substantial portion of its cash flows to payments on its debt, thereby reducing the availability of its cash flow for other purposes including its operations, capital expenditures and future business opportunities. |
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The payment of dividends on New Graphic common stock will be restricted and, moreover, subject to the discretion of New Graphic’s board of directors. |
New Graphic’s access to the capital markets may be limited. |
• | general economic and capital market conditions; | |
• | covenants in its existing debt and credit agreements; | |
• | credit availability from banks and other financial institutions; | |
• | investor confidence in New Graphic; | |
• | its consolidated financial performance; | |
• | its levels of indebtedness; | |
• | its maintenance of acceptable credit ratings; | |
• | its cash flow; | |
• | provisions of tax and securities laws that may impact raising capital; and | |
• | its long-term business prospects. |
New Graphic will be dependent on key customers and strategic relationships, and the loss of or reduced sales to key customers or changes in these relationships could result in decreased revenues, lower cash flows and harm New Graphic’s financial position. |
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New Graphic will face intense competition and, if it is unable to compete successfully against other manufacturers of packaging product solutions it could lose customers and its revenues may decline. |
Significant increases in prices for raw materials, energy, transportation and other necessary supplies and services could adversely affect New Graphic’s financial results. |
There is no guarantee that New Graphic’s efforts to reduce costs will be successful. |
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Loss of key management personnel could adversely affect New Graphic’s business. |
Work stoppages and other labor relations matters may make it substantially more difficult or expensive for New Graphic to manufacture and distribute its products, which could result in decreased sales or increased costs, either of which would negatively impact New Graphic’s financial condition and results of operations. |
New Graphic may not be able to adequately protect its intellectual property and proprietary rights, which could harm its future success and competitive position. |
New Graphic will be subject to environmental, health and safety laws and regulations, and costs to comply with such laws and regulations, or any liability or obligation imposed under such laws or regulations, could negatively impact its financial condition and results of operations. |
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New Graphic’s operations outside the U.S. will be subject to the risks of doing business in foreign countries. |
• | compliance with and enforcement of environmental, health and safety and labor laws and other regulations of the foreign countries in which New Graphic operates; | |
• | export compliance; | |
• | imposition or increase of withholding and other taxes on remittances and other payments by foreign subsidiaries; and | |
• | imposition or increase of investment and other restrictions by foreign governments. |
If New Graphic issues a material amount of its common stock in the future, certain New Graphic stockholders sell a material amount of New Graphic common stock, or a material amount of interests in the indirect stockholders of New Graphic are sold, New Graphic’s ability to use its net operating losses to offset its future taxable income may be limited under Section 382 of the Internal Revenue Code. |
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The value of the shares of New Graphic common stock that you receive upon the completion of the transactions may be less than the value of your shares of Graphic common stock as of the date of the transaction agreement or on the date of the special meeting. |
A few significant stockholders may influence or control the direction of New Graphic’s business. If the ownership of New Graphic common stock continues to be highly concentrated, it may limit the ability of you and other stockholders to influence significant corporate decisions. |
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New Graphic stockholders may be adversely affected by the expiration of the transfer restrictions in the stockholders agreement, which would enable the Coors Family Stockholders, the CDR Fund, EXOR and the TPG Entities to transfer a significant percentage of their New Graphic common stock to a third party. |
New Graphic’s proposed certificate of incorporation, by-laws, stockholder rights plan and Delaware law may discourage takeovers and business combinations that its stockholders might consider in their best interests. |
• | authorization of the issuance of preferred stock, the terms of which may be determined at the sole discretion of the board of directors; | |
• | a classified board of directors with staggered, three-year terms; | |
• | provisions giving the board of directors sole power to set the number of directors; | |
• | limitation on the ability of stockholders to remove directors; | |
• | prohibition on stockholders calling special meetings of stockholders; | |
• | establishment of advance notice requirements for stockholder proposals and nominations for election to the board of directors at stockholder meetings; and | |
• | requirement that the holders of at least 75% of outstanding common stock approve the amendment of New Graphic’s by-laws and provisions of New Graphic’s certificate of incorporation governing the classified board and the liability of directors. |
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• | the ability of Graphic and BCH to complete the transactions; | |
• | the success of the business of New Graphic after the completion of the transactions; | |
• | the successful integration of Graphic and BCH after the completion of the transactions; | |
• | the anticipated benefits of combining Graphic and BCH; | |
• | beliefs and assumptions about costs relating to the transactions and integrating Graphic and BCH; | |
• | inflation of and volatility in raw material and energy costs; | |
• | New Graphic’s substantial amount of debt; | |
• | continuing pressure for lower cost products; | |
• | New Graphic’s ability to implement its business strategies, including productivity initiatives and cost reduction plans; | |
• | currency movements and other risks of conducting business internationally; | |
• | the impact of regulatory and litigation matters, including those that impact New Graphic’s ability to protect and use its intellectual property; | |
• | the availability of net operating losses to offset future taxable income; and | |
• | the interests and actions of the Coors Family Stockholders, the CDR Fund, EXOR and the TPG Entities and the implications of these stockholders’ significant influence over New Graphic. |
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• | executing and submitting a revised proxy (including a telephone or Internet vote); | |
• | sending written notice of revocation to Graphic’s Secretary at the address provided at the beginning of this proxy statement/prospectus; or | |
• | voting in person at the special meeting. |
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• | The Graphic board of directors believed that the combination of the operations of Graphic and Altivity would provide stronger and more stable cash flows, and therefore greater financial stability, than could have been achieved by Graphic on a stand-alone basis. This enhanced financial performance and position should permit New Graphic to accelerate its debt reduction, enhance its credit profile, improve leverage ratios and finance ongoing investments. | |
• | The complementary product offerings of Graphic and Altivity, which when combined create an ability to offer comprehensive consumer packaging solutions to existing and new customers of both companies. | |
• | The new company will have expanded market reach into small specialty segments of the folding carton market, as well as new packaging markets, including labels, flexible packaging and multi-wall bags. | |
• | The expansion of product growth opportunities for the combined company in the packaging market. | |
• | The opportunity to achieve significant cost synergies identified in connection with the transactions, including: |
– | operating and overhead expense reductions; | |
– | supply chain procurement improvements; | |
– | facility optimization; and | |
– | manufacturing process improvements. |
• | The opportunity for additional cost savings from Altivity’s ongoing integration of Smurfit-Stone Container Corporation’s Consumer Packaging Division and the Field Companies as a result of manufacturing network optimization efforts, overhead reduction and supply chain improvements. | |
• | The potential for enhanced liquidity for stockholders. | |
• | Potential tax savings from Graphic’s net operating losses. | |
• | The balance of rights and restrictions in the stockholders agreement. While the TPG Entities would have a significant share ownership position in New Graphic, the stockholders agreement and the New Graphic stockholders rights plan, subject to their terms, would prevent the acquisition of additional equity securities of New Graphic and restrict the ability of the TPG Entities to exert control over New Graphic. | |
• | The transactions are intended to be tax-free to Graphic stockholders. The transactions are not intended to result in any adverse tax consequences to a Graphic stockholder that does not have certain tax attributes. See “— Material U.S. Federal Tax Consequences to Graphic Stockholders.” | |
• | The ability to offer a tax-free transaction to Altivity’s current owners by structuring the transactions under federal income tax laws as a contribution by Graphic and BCH of their respective businesses to New Graphic. | |
• | The terms and conditions of the transaction agreement, including: |
– | the closing conditions to the transaction; | |
– | the provisions of the transaction agreement that allow Graphic to engage in negotiations with, and provide information to, third parties, under certain limited circumstances in response to an unsolicited written takeover proposal that the Graphic board of directors determines in good faith, after |
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consultation with its legal advisors and its financial advisors, would reasonably be expected to result in a superior proposal (defined below), if the Graphic board of directors concludes that the failure to take such action would be reasonably expected to violate its fiduciary duties; |
– | the provisions of the transaction agreement that allow the Graphic board of directors, under certain limited circumstances if required in order not to violate its fiduciary duties under applicable law, to change its recommendation that Graphic stockholders vote in favor of the adoption of the transaction agreement. Such a change, if made in connection with a superior proposal, would reduce the percentage of the shares of Graphic common stock owned by certain parties to the stockholders agreement that are required to be voted in favor of the adoption of the transaction agreement under the terms of the voting agreement; and | |
– | the termination fee of up to $35,000,000 and the circumstances under which such fee is payable (including a termination due to a change of recommendation, as referenced above), which the Graphic board of directors concluded were reasonable in light of the benefits of the transactions and commercial precedent. |
• | The opinion of Goldman Sachs, dated July 9, 2007, provided to the Graphic board of directors, that, as of the date of the opinion, and based upon and subject to the factors and assumptions set forth in the opinion, the 139,445,038 shares of New Graphic common stock, taken in the aggregate, to be issued by New Graphic in exchange for 100% of the outstanding BCH equity interests pursuant to the transaction agreement was fair from a financial point of view to Graphic, as more fully described below under “— Opinion of Financial Advisor to Graphic.” |
• | The difficulty of integrating Graphic and Altivity, including difficulties in the ongoing integration of Smurfit-Stone Container Corporation’s Consumer Packaging Division and the Field Companies. | |
• | The risk that the identified cost synergies will not be fully attained within the expected time frame, or at all. | |
• | The substantial costs to be incurred in connection with the transactions, including transaction expenses and costs related to integration of the two companies. | |
• | The initial highly leveraged financial position of the combined company. | |
• | The presence of a new large stockholder, the TPG Entities, which have the right to nominate three directors to the board of directors of New Graphic following the completion of the transactions and will otherwise be able to exercise significant influence over matters requiring stockholder approval, which could result in New Graphic taking actions that New Graphic’s other stockholders do not support. | |
• | The potential that the transactions would not be consummated and the resulting expenditure of resources without receipt of the expected benefits. | |
• | The risk that various provisions of the transaction agreement, including the requirement that Graphic submit the transaction agreement to its stockholders even if the Graphic board of directors changes its recommendation of the transaction agreement and the transactions, and the voting agreement may have the effect of discouraging other persons potentially interested in an acquisition of, or combination with, Graphic from pursuing that opportunity. | |
• | The absence of contractual indemnities for breaches of representations and warranties by BCH. | |
• | Loss of customers or key employees. | |
• | The other risks described in “Risk Factors” beginning on page 20. |
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• | the transaction agreement; | |
• | annual reports to stockholders and Annual Reports onForm 10-K of Graphic for the three fiscal years ended December 31, 2006; | |
• | audited financial statements and accompanying notes of Altivity for the two fiscal years ended December 31, 2006; | |
• | the unaudited balance sheet of BCH as of March 31, 2007; | |
• | certain interim reports to stockholders and Quarterly Reports onForm 10-Q of Graphic; | |
• | certain other communications from Graphic and Altivity to their respective equity holders; | |
• | certain internal financial analyses and forecasts for Altivity and BCH prepared by the management of BCH; | |
• | certain internal financial analyses and forecasts for Graphic prepared by its management; and | |
• | certain financial analyses and forecasts for Altivity and BCH prepared by the management of Graphic, which we refer to as the “forecasts,” including certain cost savings and operating synergies projected by the management of Graphic to result from the transactions, which we refer to as the “synergies.” |
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Contribution Analysis |
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Adjusted | Adjusted | Adjusted | ||||||||||||||
Adjusted | EBITDA — Capital | EBITDA — Ordinary | Free Cash | |||||||||||||
EBITDA | Expenditures(1) | Capital Expenditures(2) | Flow(3) | |||||||||||||
Graphic Contribution to Combined Company Equity Value | 55 – 68 | % | 59 – 80 | % | 52 – 70 | % | 43 – 79 | % |
(1) | BCH’s capital expenditures for fiscal years 2007 through 2009 include capital expenditures to achieve cost savings for BCH as a standalone company resulting from the integration of Smurfit-Stone Container Corporation’s Consumer Packaging Division and the Field Companies. | |
(2) | BCH’s ordinary capital expenditures for fiscal years 2007 through 2009 exclude capital expenditures to achieve cost savings for BCH as a standalone company resulting from the integration of Smurfit-Stone Container Corporation’s Consumer Packaging Division and the Field Companies. | |
(3) | BCH’s free cash flows for fiscal years 2007 through 2009 exclude capital expenditures and other expenditures to achieve cost savings for BCH as a standalone company resulting from the integration of Smurfit-Stone Container Corporation’s Consumer Packaging Division and the Field Companies. |
Analysis of Transaction Implied Multiples |
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BCH | Graphic | Rock-Tenn | ||||||||||||||
Implied Multiple | Implied Multiple | Implied Multiple(1) | ||||||||||||||
Enterprise Value/Adjusted EBITDA | FY 2006 | 10.6 | x | 9.2 | x | 8.0 | x | |||||||||
FY 2007E | 8.7 | 8.5 | 7.4 | |||||||||||||
FY 2008E | 7.8 | 7.6 | 7.3 | |||||||||||||
FY 2009E | 7.0 | 6.7 | — | |||||||||||||
Enterprise Value/Adjusted EBITDA — Ordinary Capex | FY 2006 | 15.1 | x | 12.9 | x | 11.3 | x | |||||||||
FY 2007E | 12.0 | 11.9 | 10.3 | |||||||||||||
FY 2008E | 10.4 | 10.0 | 10.0 | |||||||||||||
FY 2009E | 8.9 | 8.4 | — |
(1) | Based on IBES estimates of EBITDA and assumes capital expenditures held constant for 2007-2008. |
Caraustar | Chesapeake | Sunoco | ||||||||||||||
Industries, Inc. | Corp. | Products Co. | ||||||||||||||
Implied Multiple | Implied Multiple | Implied Multiple | ||||||||||||||
Enterprise Value/EBITDA | LTM | (1) | 13.0 | x | 7.0 | x | 9.4 | x | ||||||||
FY 2007 | 9.5 | 6.3 | 9.1 | |||||||||||||
FY 2008 | 7.6 | 5.7 | 8.4 |
(1) | “Last Twelve Months” representing the twelve months ending March 31, 2007. |
Illustrative Discounted Cash Flow Analysis |
Illustrative Equity Value | Implied Pro Forma | |||||||
(US$ in millions) | Ownership (%) | |||||||
Graphic | 1,039 - 2,017 | 64.06 - 64.74 | ||||||
BCH | 566 - 1,132 | 35.26 - 35.94 |
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Selected Transactions Analysis |
• | Carter Holt Harvey Limited — International Paper Company’s beverage packaging business (2007); | |
• | Texas Pacific Group — Field Container Company, L.P. (2006); | |
• | Texas Pacific Group — Smurfit-Stone Container Corporation’s consumer packaging segment (2006); | |
• | American Capital Strategies Ltd. — Ranpak Corporation (2005); | |
• | Rock-Tenn Company — Gulf States Paper Corporation (2005); | |
• | Sonoco Products Company — CorrFlex Graphics, LLC (2004); | |
• | Riverwood Holding, Inc. — Graphic International Corporation (2003); | |
• | Solo Cup Company — Sweetheart Holdings Inc. (2003); | |
• | SCA Packaging International BV— Tuscarora Incorporated (2001); | |
• | Chesapeake Corporation — First Carton Group Limited (2000); | |
• | Westvaco Corporation — IMPAC Group, Inc. (2000); | |
• | International Paper Company — Shorewood Packaging Corporation (2000); | |
• | Westvaco Corporation — Mebane Packaging Group Inc. (2000); | |
• | Chesapeake Corporation — Boxmore International PLC (1999); | |
• | Chesapeake Corporation — Consumer Promotions International, Inc. (1999); | |
• | Gulf States Paper Corporation — Laird Packaging, Inc. (1999); | |
• | ACX Technologies, Inc. — Fort James Packaging Corporation’s packaging business (1999); | |
• | Caraustar Industries, Inc. — Tenneco Packaging Inc.’s folding carton division (1999); | |
• | Caraustar — International Paper Company’s boxboard mill (1999); | |
• | Chesapeake Corporation — Field Group P.L.C. (1999); | |
• | Huhtamaki — Royal Packaging Industries Van Leer N.V. (1999); | |
• | Madison Dearborn Partners — Tenneco Automotive Inc.’s containerboard business (1999); | |
• | IMPAC Group, Inc. — Tinsley Robor PLC (1998); | |
• | Packaging Dynamics Corporation — Bagcraft Corporation of America (1998); | |
• | Shorewood Packaging Corporation — Queens Group, Inc. (1998); | |
• | Huhtamaki Oy — Sealright Co., Inc. (1998); | |
• | The Blackstone Group — Graham Packaging Holdings Company (1997); | |
• | ACX Technologies, Inc. — Britton Group plc (UPC packaging only) (1997); | |
• | Caraustar Industries, Inc. — Oak Tree Packaging Corporation (1997); | |
• | Cravey, Green & Whalen — Mebane Packaging Group (1997); |
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• | Ranger — Waldorf (1997); | |
• | Heritage Partners — Klearfold, Inc. (1996); | |
• | Caraustar Industries, Inc. — Tenneco, Inc. (Ritman and Tana plants) (1996); | |
• | Caraustar Industries, Inc. — GAR Holding Company (1995); | |
• | Clayton Dubilier — Riverwood International Corporation (1995); | |
• | Republic Group Incorporated — Halltown Paperboard Company/Dillard Investment Corporation (1995); | |
• | Ranger — Olympic Packaging (1994); | |
• | Alusuisse-Lonza Holding AG — Lawson Mardon Group Ltd. (1994); and | |
• | Shorewood Packaging Corporation — Premium Packaging Group of Cascades Paperboard International, Inc. (1994). |
Levered Market Capitalization | Selected Transactions | |||||||
as a Multiple of: | Range | Median | ||||||
LTM Sales | 0.6x-1.9x | 0.9x | ||||||
LTM EBITDA | 4.8x-10.3x | 7.2x |
Illustrative Future Stock Price Analysis |
• | Scenario one: Graphic continuing as a standalone company; | |
• | Scenario two: Graphic combining with BCH, assuming synergies for fiscal years 2008, 2009 and 2010, and no limitations on the use of Graphic’s net operating losses, or NOLs; and | |
• | Scenario three: Graphic combining with BCH, assuming synergies for fiscal years 2008, 2009 and 2010, and an NOL limitation per Graphic management’s guidance. |
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Pro Forma Merger Analysis |
Miscellaneous |
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Adjusted EBITDA | Graphic | BCH | ||||||
(US$ in millions) | ||||||||
2007E per Graphic | 349 | 202 | ||||||
2007E per BCH | — | 222 | ||||||
2008E per Graphic | 390 | 226 | ||||||
2009E per Graphic | 446 | 252 |
Adjusted Free Cash Flow per Graphic | Graphic | BCH | ||||||
(US$ in millions) | ||||||||
2007E | 100 | 55 | ||||||
2008E | 96 | 77 | ||||||
2009E | 190 | 85 |
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Voting of Shares |
• | in favor of the adoption of the transaction agreement and approval of the transactions and any other related proposal submitted for a vote of Graphic stockholders in furtherance of the transaction agreement, as reasonably requested by BCH; | |
• | against any action or agreement submitted for a vote or written consent of Graphic stockholders that is in opposition to, or competitive or materially inconsistent with the transactions or that would result in a breach of the transaction agreement by Graphic or of the voting agreement by such stockholder; and | |
• | against any takeover proposal and any other action, agreement or transaction submitted for a vote or written consent of Graphic stockholders that would reasonably be expected to impede, interfere with, delay, postpone, discourage, frustrate the purposes of or adversely affect the transactions contemplated by the transaction agreement or the voting agreement or Graphic’s performance of its obligations under the transaction agreement or by such stockholder of its obligations under the voting agreement. |
Grant of Proxy |
Transfer and Other Restrictions |
• | sell, transfer, assign, pledge or similarly dispose of its shares of Graphic common stock or any interest in Graphic common stock (except for certain transfers to related parties of the stockholders that agree to be bound by the voting agreement); | |
• | enter into any agreement, arrangement or understanding with any person, or take any action that would violate or conflict with its representations, warranties, covenants or obligations under the voting agreement or that would restrict or otherwise affect its legal power, authority and right to perform its covenants and obligations under the voting agreement; or | |
• | take any action that could restrict or otherwise affect such stockholder’s legal power, authority and right to comply with and perform its covenants and obligations under the voting agreement. |
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• | solicit, initiate, or knowingly encourage or knowingly facilitate any takeover proposal or the making or consummation of a takeover proposal; | |
• | enter into, continue or otherwise participate in any discussions or negotiations regarding, furnish any confidential information in connection with, or otherwise cooperate in any way with any takeover proposal; | |
• | waive, terminate, modify or fail to enforce any provision of any standstill or similar obligation of any person other than BCH; | |
• | make or participate in any solicitation of proxies, or powers of attorney or similar rights to vote, or seek to advise or influence any person with respect to the voting of Graphic common stock other than to recommend the adoption of the transaction agreement; | |
• | approve, adopt or recommend or allow any of its subsidiaries to execute or enter into, any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement, option agreement, joint venture agreement, partnership agreement, or other similar contract or any tender or exchange offer providing for, with respect to, or in connection with, any takeover proposal; or | |
• | agree or publicly propose to do any of the foregoing. |
• | the closing of the transactions; | |
• | the date of termination of the transaction agreement in accordance with its terms; and | |
• | the delivery of written notice of termination by the stockholders to BCH following any amendment to the transaction agreement, without the prior written consent of the Graphic stockholders, if such amendment changes the form or reduces the amount of consideration to be paid in the merger. |
Equity Compensation Awards |
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Shares | Cash* | |||||||
Daniel J. Blount | 128,052 | $ | 509,647 | |||||
Michael P. Doss | 79,188 | $ | 315,168 | |||||
Stephen A. Hellrung | 131,910 | $ | 525,002 | |||||
Stephen M. Humphrey | 579,093 | $ | 2,304,790 | |||||
Wayne E. Juby | 123,498 | $ | 491,522 | |||||
David W. Scheible | 257,178 | $ | 1,023,568 | |||||
Michael R. Schmal | 133,702 | $ | 532,134 | |||||
Robert M. Simko | 115,541 | $ | 459,853 |
* | Based upon an assumed market value of Graphic’s common stock of $3.98 per share, the closing price of Graphic on November 27, 2007. |
Continuing Executive Positions |
Continuing Board Positions |
Indemnification Obligations |
Reimbursement of HSR Filing Fees |
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Hart-Scott-Rodino Act |
Other Regulatory Filings |
• | tax consequences to holders who may be subject to special tax treatment, such as expatriates, brokers and dealers in securities or currencies, financial institutions, mutual funds, tax-exempt entities, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, and insurance companies; | |
• | tax consequences to Graphic stockholders who acquired their shares of Graphic common stock pursuant to the exercise of employee stock options or warrants or otherwise as compensation; | |
• | tax consequences to persons holding Graphic common stock as part of a hedging, integrated, constructive sale or conversion transaction, a straddle or other risk reduction transaction; |
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• | tax consequences to holders of outstanding Graphic stock options; | |
• | tax consequences to “U.S. holders,” as defined below, of Graphic common stock whose “functional currency” is not the U.S. dollar; | |
• | tax consequences to certain“non-U.S. holders,” as defined below, subject to special rules such as “controlled foreign corporations,” “passive foreign investment companies” and “foreign personal holding companies”; | |
• | alternative minimum tax consequences, if any; and | |
• | any state, local, foreign or other tax consequences. |
Tax Treatment of Transactions |
Considerations for U.S. Holders of Graphic Common Stock |
• | a citizen or resident of the United States; | |
• | a corporation, or a partnership or other entity treated as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States or any political subdivision of the United States; | |
• | an estate the income of which is subject to U.S. federal income taxation regardless of its source; or |
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• | a trust if (i) it is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. |
• | the amount of cash and the fair market value of any property received; and | |
• | the U.S. holder’s tax basis in such stock. |
Considerations forNon-U.S. Holders of Graphic Common Stock |
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Information Reporting and Backup Withholding |
• | there is no actual knowledge or reason to know that you are a U.S. person, as defined under the Internal Revenue Code, that is not an exempt recipient; and | |
• | you have provided your name and address, and certified under penalties of perjury, that you are not a U.S. person, which certification may be made on the appropriate IRSForm W-8BEN;W-8ECI,W-8EXP orW-8IMY or substitute IRSForm W-8BEN,W-8ECI,W-8EXP orW-8IMY. |
• | the payor of the proceeds receives the statement described above and does not have actual knowledge or reason to know that you are a U.S. person, as defined under the Internal Revenue Code, that is not an exempt recipient; | |
• | you provide the payor with a taxpayer identification number and other information, certified under penalties of perjury; or | |
• | you otherwise establish, in the manner prescribed by law, an exemption from backup withholding. |
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• | The closing of a new $1.2 billion senior secured term loan facility to refinance the outstanding amounts under BCH’s existing first and second lien credit facilities. |
• | The closing of an increase to the existing revolving credit facility to $400 million from $300 million. |
• | incur additional indebtedness; | |
• | incur guarantee obligations; |
• | create or permit liens on assets; |
• | dispose of assets; | |
• | prepay other indebtedness; | |
• | make dividends and other restricted payments; | |
• | make certain debt or equity investments; | |
• | make certain acquisitions; | |
• | engage in certain transactions with affiliates; and | |
• | change the business conducted by Graphic and its subsidiaries. |
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• | the consummation of the transactions in all material respects in accordance with the transaction agreement without modifications, amendments or waivers material and adverse to the lenders; | |
• | the negotiation, execution and delivery of definitive loan documentation, provided that such documentation will not contain any provisions which would cause the new credit facilities to not be available if the explicit conditions in the commitment letter are met and representations and warranties will be limited to those representations and warranties in the transaction agreement to the extent material to the interests of the lenders and certain specified representations and warranties; | |
• | the delivery of certain financial statements; and | |
• | the delivery of certain customary closing certificates and opinions. |
• | the net proceeds of certain debt offerings by the borrower and its subsidiaries (other than debt offerings permitted by the credit facilities); and | |
• | the net proceeds of certain non-ordinary asset sales by the borrower and its subsidiaries. |
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• | the voting agreement; | |
• | the stockholders agreement; and | |
• | the registration rights agreement. |
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• | the adoption of the transaction agreement and the approval of the transactions by Graphic stockholders; | |
• | no law, order or judgment having been issued, enacted, entered or enforced by any court or other governmental authority preventing or making illegal the consummation of the transactions; | |
• | any required clearance or approval of the German Cartel Office; | |
• | the expiration or termination of any waiting period applicable to the transactions in respect of filings by Graphic and BCH under the HSR Act; | |
• | the approval of the listing on the NYSE of New Graphic common stock to be issued in connection with the transactions; and | |
• | the registration statement of which this proxy statement/prospectus forms a part shall have become effective under the Securities Act and shall not be the subject of any stop order or proceeding seeking stop order. |
• | the representations and warranties of Graphic must be true and correct on the date of the transaction agreement and as of the closing date of the transactions as though they were made on and as of such date, except for representations and warranties which speak as of an earlier date, which must be true and correct as of such date, except where the failure of such representations and warranties to be true and correct does not have, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, as described below, on Graphic; | |
• | Graphic, New Graphic and Merger Sub must have performed in all material respects all obligations required to be performed by them under the transaction agreement prior to the closing date of the transactions; | |
• | BCH must have received an opinion from Simpson Thacher & Bartlett LLP, counsel to BCH, regarding the tax treatment of the merger and the contribution of the equity interests of BCH by the Sellers as exchanges under Section 351 of the Internal Revenue Code and that the exchange and subsequent |
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liquidation of certain corporate Sellers will be treated for federal income tax purposes as transactions described in Section 368(a) of the Internal Revenue Code; and |
• | New Graphic, along with any of the TPG Entities that make such a request of New Graphic, shall have entered into management rights agreements substantially in the forms of the existing management rights agreements certain of the Sellers have entered into with BCH. |
• | the representations and warranties of the Sellers and BCH must be true and correct as of the closing date of the transactions as though they were made on and as of such date, except for representations and warranties which speak as of an earlier date, which must be true and correct as of such date, except where the failure of such representations and warranties to be true and correct does not have, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, as described below, on BCH; | |
• | BCH and the Sellers must have performed in all material respects all obligations required to be performed by them under the transaction agreement prior to the closing date of the transactions; and | |
• | Graphic must have received the opinion of Alston & Bird LLP, counsel to Graphic, to the effect that the exchange of BCH equity interests and Graphic common stock for New Graphic common stock pursuant to the transactions, taken together, will, with respect to Graphic, be treated for Federal income tax purposes as a transaction described in Section 351 or 368(a) of the Internal Revenue Code. |
• | changes or developments in financial, economic, political or industry conditions in the United States or any other jurisdiction in which such person has substantial business operations (except to the extent those changes have a materially disproportionate effect on such person); | |
• | changes or developments resulting from factors generally affecting any business in which such person has substantial business operations (except to the extent those changes have a materially disproportionate effect on such person and its subsidiaries); | |
• | changes or developments, after the date of the transaction agreement, in any laws or generally accepted accounting principles or the interpretation or enforcement thereof; | |
• | changes or developments resulting from or caused by natural disasters, outbreak of major hostilities in which the United States is involved or any act of war or terrorism within the United States or directed against its facilities or citizens wherever located; | |
• | changes or developments relating to the announcement of, entry into, pendency of, actions contemplated by or performance of obligations under, the transaction agreement and the transactions or the identity of the parties to the transaction agreement, including any termination of, reduction in or similar adverse impact on relationships, contractual or otherwise, with any customers, suppliers, distributors, partners or employees of such person relating thereto; | |
• | failure by such person to meet internal or third party projections or forecasts or any published revenue or earnings projections for any period; provided, that this exception shall not prevent or otherwise affect |
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any determination that any event, condition, change, occurrence, development or state of facts underlying such failure has or resulted in, or contributed to, a Material Adverse Effect; |
• | changes in the market value or the market price or trading value of the publicly traded securities of such person; provided, that this exception shall not prevent or otherwise affect any determination that any event, condition, change, occurrence, development or state of facts underlying such change has or resulted in, or contributed to, a Material Adverse Effect; or | |
• | actions required or contemplated to be taken by such person under the transaction agreement or taken at the express request or direction of the other party to the transaction agreement. |
• | solicit, initiate, knowingly encourage or knowingly facilitate any takeover proposal, as described below or the consummation thereof; | |
• | enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any person any information in connection with, or otherwise cooperate in any way with any takeover proposal; or | |
• | waive, terminate, modify or fail to enforce any provision of any “standstill” or similar obligation of any person. |
• | any direct or indirect acquisition or purchase, in one transaction or a series of related transactions, of assets or businesses that constitute 15% or more of the consolidated revenues, net income or assets of BCH or Graphic, as the case may be, or 15% or more of any class of equity securities of BCH or Graphic, as the case may be; or | |
• | any tender offer or exchange offer, merger, consolidation, business combination, recapitalization, liquidation, dissolution, joint venture, share exchange or similar transaction that if consummated would result in any person beneficially owning 15% or more of any class of equity securities of BCH or Graphic or any resulting parent of BCH or Graphic, as the case may be; |
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• | to be more favorable to the stockholders of Graphic from a financial point of view than the transactions (after giving effect to any changes proposed by BCH in response to such offer) and reasonably capable of being completed in a timely manner on the terms set forth in the proposal; and | |
• | for which financing, to the extent required, is reasonably assured of being obtained. |
• | withdraw, modify, or qualify in any manner or take any action or make any public statement that is inconsistent with, its recommendation of the transaction agreement and the transactions; | |
• | approve or recommend, or publicly propose to approve or recommend, any takeover proposal; or | |
• | allow Graphic to execute or enter into, any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement, option agreement, joint venture agreement, partnership agreement, or other similar contract or any tender or exchange offer providing for, with respect to, or in connection with, any takeover proposal; |
• | provided to BCH five business days’ prior written notice advising BCH that the Graphic board of directors intends to take such action and specifying the reasons therefor in reasonable detail, including, if applicable, the terms and conditions of any superior proposal that is the basis of the proposed action by the Graphic board of directors and the identity of the person making the proposal (any material amendment to such superior proposal will require a new written notice to BCH plus two additional business days); and | |
• | during such five business day period, if requested by BCH, engaged in good faith negotiations with BCH to amend the transaction agreement or make other agreements in such a manner that failure to take the proposed action by the board of directors would not be reasonably expected to violate its fiduciary duties under applicable law. |
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• | by mutual consent of the Sellers Representative and Graphic; | |
• | by either the Sellers Representative or Graphic if: |
– | any judgment, decree, injunction, ruling, award, settlement, stipulation or order permanently restraining, enjoining or otherwise prohibiting the completion of the transactions becomes final and non-appealable, except no party may terminate the transaction agreement if such party’s failure to fulfill any obligation under the transaction agreement has been the cause of such action; | |
– | the transactions have not been completed by March 31, 2008 (which date may be extended by Graphic or the Sellers Representative by written notice to the other prior to March 31, 2008 to May 31, 2008 if the delay is the result of the failure to obtain antitrust approvals), except no party may terminate the transaction agreement on such date if such party’s failure to fulfill any obligation under the transaction agreement has prevented the completion of the transactions from occurring prior to such date; | |
– | Graphic stockholders fail to adopt the transaction agreement and approve the transactions at the special meeting; | |
– | there shall have been a breach by the other party of any of the covenants or agreements or any of the representations or warranties on the part of such other party, which breach, either individually or in the aggregate, would result in, if occurring or continuing on the closing date of the transactions, the closing conditions under the transaction agreement to fail to be satisfied, which breach is not cured within 30 days after notice of such breach or which cannot be cured within such time frame;provided, however,that no party may terminate the transaction agreement under this provision if such party is in material breach of any covenant or other agreement or in willful and material breach of any representation or warranty; or |
• | by Sellers Representative if, prior to the time the transaction agreement has been adopted and the transactions approved by Graphic stockholders: |
– | the Graphic board of directors (i) withdraws, amends, modifies or qualifies or publicly proposes to withdraw, amend, modify or qualify its recommendation, approval, adoption or declaration of advisability of the transaction agreement or has recommended that Graphic stockholders reject the transaction agreement or the transactions; or (ii) fails to publicly reaffirm its adoption and recommendation of the transactions within ten business days of receipt of a written request by BCH to provide such reaffirmation following a takeover proposal; or |
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– | Graphic has materially breached certain provisions of the transaction agreement relating to the non-solicitation of takeover proposals and such breach is not cured within 30 days after notice of such breach or exempts any person from any Delaware “interested stockholder” law or amends its stockholder rights plan to exclude any person for the purpose of permitting an acquisition of shares of Graphic common stock. |
• | by either Sellers Representative or Graphic, if the transactions have not been completed by March 31, 2008 (which date may be extended by Graphic or Sellers Representative by written notice to the other prior to March 31, 2008 to May 31, 2008 if the delay is the result of the failure to obtain antitrust approvals) and the Graphic board of directors had previously adversely changed its recommendation regarding the transaction agreement and the transactions; | |
• | by Sellers Representative due to a breach by Graphic of any of its covenants or agreements or representations or warranties, which breach, either individually or in the aggregate, would result in, if occurring or continuing on the closing date, the closing conditions under the transaction agreement to fail to be satisfied, which breach is not cured within 30 days after notice of such breach or which cannot be cured within such time frame and the Graphic board of directors had previously adversely changed its recommendation regarding the transaction agreement and the transactions; or | |
• | by Sellers Representative prior to the time the transaction agreement has been adopted and the transactions approved by Graphic stockholders, if (i) the Graphic board of directors (x) withdraws, amends, modifies or qualifies or publicly proposes to withdraw, amend, modify or qualify its recommendation, approval, adoption or declaration of advisability of the transaction agreement or has recommended that Graphic stockholders reject the transaction agreement or the transactions; or (y) fails to publicly reaffirm its adoption and recommendation of the transactions within ten business days of receipt of a written request by BCH to provide such reaffirmation following a takeover proposal; or (ii) Graphic has materially breached certain provisions of the transaction agreement relating to non-solicitation or takeover proposals which such breach is not cured within 30 days after notice of such breach or exempts any person from any Delaware “interested stockholder” law or amends its stockholder rights plan to exclude any person for the purpose of permitting an acquisition of shares of Graphic common stock. |
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• | by either Sellers Representative or Graphic, if the transactions have not been completed by March 31, 2008 (which date may be extended by Graphic or the Sellers Representative by written notice to the other prior to March 31, 2008 to May 31, 2008 if the delay is the result of failure to obtain antitrust approvals); | |
• | by either Sellers Representative or Graphic, if Graphic stockholders fail to adopt the transaction agreement and approve the transactions at the special meeting; or | |
• | by either Sellers Representative, due to a breach by Graphic of any of its covenants or agreements or representations or warranties, which breach, either individually or in the aggregate, would result in, if occurring or continuing on the closing date, the closing conditions under the transaction agreement to fail to be satisfied, which breach is not cured within 30 days after notice of such breach or which cannot be cured within such time frame; |
• | pay any dividends; | |
• | split, combine or reclassify any capital stock; | |
• | redeem any shares of capital stock; | |
• | issue any additional shares of capital stock or rights to purchase such shares; | |
• | amend its governing documents; |
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• | acquire in any manner assets of any third party, except for certain capital expenditures not in excess of $20 million, ordinary course transactions or other acquisitions not in excess of $1 million; | |
• | sell, lease or encumber any of its material properties or assets to third parties, except for disclosed agreements, ordinary course transactions or other sales, leases or encumbrances on assets not exceeding $10 million in the aggregate in any 6 month period; | |
• | redeem or incur additional indebtedness, except in the ordinary course of business under current agreements; | |
• | settle, waive or assign any claims or rights material to such person; | |
• | enter into, materially modify, terminate or cancel any material contract; | |
• | adopt, enter into, terminate or amend any Benefit Plan; | |
• | make any material changes in accounting methods, principles or practices, except as required by GAAP; or | |
• | make any material changes in its method of tax accounting or tax elections. |
• | if doing so would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on New Graphic; or | |
• | that is not conditioned upon the completion of the transactions. |
• | cooperate with each other in connection with any filing or submission and in connection with any investigation or other inquiry; | |
• | promptly inform each other of the status of any of the matters contemplated by the transaction agreement, including copies of any written communication received by or given to any governmental authority or in connection with any proceeding by a private party regarding the transactions; and | |
• | consult with each other prior to any meeting with any governmental authority or in connection with any proceeding by a private party and give the other party an opportunity to participate in such meetings. |
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• | organization, standing, power and foreign qualifications; | |
• | capitalization, including the capitalization of New Graphic; | |
• | authorization and the absence of conflicts; | |
• | necessary consents and approvals for the completion of the transactions; | |
• | subsidiaries; | |
• | reports, financial statements and no undisclosed liabilities; | |
• | absence of certain changes or other material adverse effect; | |
• | litigation; | |
• | broker’s or finder’s fees; | |
• | employee benefit plans; | |
• | taxes; | |
• | environmental matters; | |
• | compliance with law; | |
• | labor matters; | |
• | real and tangible property; | |
• | material contracts; | |
• | intellectual property; | |
• | information supplied in this proxy statement/prospectus; |
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• | affiliate transactions; and | |
• | insurance. |
• | organization, standing, power and foreign qualifications; | |
• | the ownership of equity interests; | |
• | authorization and the absence of conflicts; | |
• | accredited investor status; | |
• | information supplied in this proxy statement/prospectus; and | |
• | broker’s or finder’s fees. |
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• | three individuals for so long as the TPG Entities own at least 20% of the fully diluted shares of New Graphic common stock in the aggregate; | |
• | two individuals for so long as the TPG Entities own at least the lesser of (i) 16% of the fully diluted shares of New Graphic common stock in the aggregate or (ii) the percentage of New Graphic common stock then held by the Coors Family Stockholders, but not less than 10%; and | |
• | one individual for so long as the TPG Entities own at least 3% of the fully diluted outstanding shares of New Graphic common stock. |
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• | the audit committee will have at least three members, each of whom will be an independent director; | |
• | the compensation and benefits committee will have three members, each of whom will be an independent director; | |
• | the nominating and corporate governance committee will have five members, consisting of the directors designated by the Coors Family Stockholders, the CDR Fund, EXOR and two of the directors designated by the TPG Entities. The chairman of the nominating and corporate governance committee shall be any member of the committee chosen by an affirmative vote of a majority of the members of the committee; provided, however, that initially the chairman shall be John R. Miller, who shall be a non-voting chairman, and in which case the committee shall have six members. |
• | to New Graphic or in a transaction approved by the New Graphic board of directors; | |
• | to certain affiliated permitted transferees that agree to be bound by the stockholders agreement; | |
• | pursuant to a public offering; or | |
• | pursuant to a transfer made in accordance with Rule 144 of the Securities Act or that is exempt from the registration requirements of the Securities Act, to any person so long as such transferee would not own in excess of 5% of the fully diluted shares of New Graphic common stock. |
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• | acquiring the beneficial ownership of additional equity securities (or the rights to purchase equity securities) of New Graphic, subject to certain exceptions; | |
• | making or participating in any solicitation of proxies to vote any securities of New Graphic in an election contest; | |
• | participating in the formation of a group with respect to shares of New Graphic common stock (except to the extent such group is formed with respect to the stockholders agreement or the registration rights agreement); | |
• | granting any proxy to any person other than New Graphic or its designees to vote at any meeting of the New Graphic stockholders; | |
• | initiating or soliciting stockholders for the approval of one or more stockholder proposals with respect to New Graphic; | |
• | seeking to place a representative on the New Graphic board of directors, except as contemplated by the stockholders agreement; | |
• | seeking to publicly call a meeting of the New Graphic stockholders; | |
• | making any public announcement or proposal with respect to any form of business combination involving New Graphic; and | |
• | disclosing any plan to do any of the foregoing or assist or encouraging any third party to do any of the foregoing. |
• | by the unanimous consent of New Graphic and the covered stockholders; | |
• | with respect to any covered stockholder, at such time as such covered stockholder holds less than 3% of the fully diluted shares of New Graphic common stock; | |
• | except with respect to the standstill provisions, at such time as no more than one of the covered stockholders holds more than 3% of the fully diluted shares of New Graphic common stock; | |
• | except with respect to the standstill provisions, at such time as approved by each of the covered stockholders who holds in excess of 3% of the fully diluted shares of New Graphic common stock; or | |
• | upon the fifth anniversary of the effective date of the stockholders agreement;provided, however, that the confidentiality provisions of the stockholders agreement shall survive for one year following the termination of the stockholders agreement. |
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As of September 30, 2007 | ||||||||||||||||
Condensed | ||||||||||||||||
Historical | Pro Forma | Pro Forma | ||||||||||||||
Graphic | BCH | Adjustments | Combined | |||||||||||||
In millions | ||||||||||||||||
ASSETS | ||||||||||||||||
Current Assets: | ||||||||||||||||
Cash and Equivalents | $ | 10.2 | $ | 85.9 | $ | (26.0 | )(a) | $ | 10.2 | |||||||
(59.9 | )(b) | |||||||||||||||
Receivables, Net | 256.9 | 207.1 | (5.5 | )(c) | 458.5 | |||||||||||
Inventories | 310.9 | 229.8 | 18.1 | (d) | 558.8 | |||||||||||
Other Current Assets | 25.2 | 13.6 | 38.8 | |||||||||||||
Assets Held for Sale | 35.8 | — | 35.8 | |||||||||||||
Total Current Assets | 639.0 | 536.4 | (73.3 | ) | 1,102.1 | |||||||||||
Property, Plant and Equipment, Net | 1,385.9 | 620.6 | 82.4 | (e) | 2,088.9 | |||||||||||
Goodwill | 642.3 | 370.7 | 50.2 | (f) | 1,063.2 | |||||||||||
Intangible Assets, Net | 141.8 | 127.0 | 348.9 | (f) | 617.7 | |||||||||||
Deferred Tax Assets | 344.5 | — | 344.5 | |||||||||||||
Other Assets | 34.2 | 25.1 | (36.8 | )(b) | 40.5 | |||||||||||
18.0 | (b) | |||||||||||||||
Total Assets | $ | 3,187.7 | $ | 1,679.8 | $ | 389.4 | $ | 5,256.9 | ||||||||
LIABILITIES | ||||||||||||||||
Current Liabilities: | ||||||||||||||||
Short Term Debt | $ | 18.8 | $ | 10.5 | $ | $ | 29.3 | |||||||||
Accounts Payable | 204.5 | 154.0 | (5.5 | )(c) | 353.0 | |||||||||||
Other Accrued Liabilities | 161.8 | 86.7 | 7.6 | (a) | 256.1 | |||||||||||
Liabilities Held for Sale | 27.2 | — | 27.2 | |||||||||||||
Total Current Liabilities | 412.3 | 251.2 | 2.1 | 665.6 | ||||||||||||
Long Term Debt | 1,930.9 | 1,146.5 | (41.9 | )(b) | 3,035.5 | |||||||||||
Deferred Tax Liabilities | 480.3 | 0.2 | 480.5 | |||||||||||||
Accrued Pension and Postretirement Benefits | 194.0 | 41.8 | 235.8 | |||||||||||||
Other Noncurrent Liabilities | 44.9 | 7.6 | 52.5 | |||||||||||||
Total Liabilities | $ | 3,062.4 | $ | 1,447.3 | $ | (39.8 | ) | $ | 4,469.9 | |||||||
SHAREHOLDERS’ EQUITY | ||||||||||||||||
Preferred Stock | $ | — | $ | — | $ | — | $ | — | ||||||||
Contributed Capital | — | 305.0 | (305.0 | )(a) | — | |||||||||||
Common Stock | 2.0 | — | 0.1 | (a) | 3.5 | |||||||||||
1.4 | (a) | |||||||||||||||
Capital in Excess of Par Value | 1,191.0 | — | 1.1 | (a) | 1,876.8 | |||||||||||
684.7 | (a) | |||||||||||||||
Accumulated Deficit | (975.0 | ) | (61.4 | ) | 61.4 | (a) | (1,000.6 | ) | ||||||||
(8.8 | )(a) | |||||||||||||||
(16.8 | )(b) | |||||||||||||||
Accumulated Other Comprehensive Loss | (92.7 | ) | (11.1 | ) | 11.1 | (a) | (92.7 | ) | ||||||||
Total Shareholders’ Equity | 125.3 | 232.5 | 429.2 | 787.0 | ||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 3,187.7 | $ | 1,679.8 | $ | 389.4 | $ | 5,256.9 | ||||||||
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For the Nine Months Ended September 30, 2007 | ||||||||||||||||
Condensed | ||||||||||||||||
Historical | Pro Forma | Pro Forma | ||||||||||||||
Graphic | BCH | Adjustments | Combined | |||||||||||||
In millions, except per share amounts | ||||||||||||||||
Net Sales | $ | 1,819.3 | $ | 1,527.7 | $ | (32.5 | )(c) | $ | 3,314.5 | |||||||
Cost of Sales | 1,555.6 | 1,321.8 | (32.5 | )(c) | 2,860.9 | |||||||||||
6.9 | (e) | |||||||||||||||
9.1 | (f) | |||||||||||||||
Selling, General and Administrative | 141.5 | 141.5 | 8.5 | (f) | 291.5 | |||||||||||
Research, Development and Engineering | 6.7 | — | 6.7 | |||||||||||||
Other Expense (Income), net | 2.1 | (1.4 | ) | 0.7 | ||||||||||||
Income (Loss) from Operations | 113.4 | 65.8 | (24.5 | ) | 154.7 | |||||||||||
Interest Income | 0.3 | 3.5 | 3.8 | |||||||||||||
Interest Expense | (127.8 | ) | (75.1 | ) | 15.2 | (b) | (187.7 | ) | ||||||||
Other | — | (0.5 | ) | (0.5 | ) | |||||||||||
Loss on Early Extinguishment of Debt | (9.5 | ) | — | (9.5 | ) | |||||||||||
Loss before Income Taxes and Equity in Net Earnings of Affiliates | (23.6 | ) | (6.3 | ) | (9.3 | ) | (39.2 | ) | ||||||||
Income Tax Expense | (19.1 | ) | (1.6 | ) | (20.7 | ) | ||||||||||
Loss before Equity in Net Earnings of Affiliates | (42.7 | ) | (7.9 | ) | (9.3 | ) | (59.9 | ) | ||||||||
Equity in Net Earnings of Affiliates | 0.7 | — | 0.7 | |||||||||||||
Loss from Continuing Operations | $ | (42.0 | ) | $ | (7.9 | ) | $ | (9.3 | ) | $ | (59.2 | ) | ||||
Income (Loss) Per Share: | ||||||||||||||||
Basic | (0.21 | ) | (0.17 | ) | ||||||||||||
Diluted | (0.21 | ) | (0.17 | ) | ||||||||||||
Weighted Average Shares Outstanding: | ||||||||||||||||
Basic | 201.7 | 141.1 | 342.8 | |||||||||||||
Diluted | 201.7 | 141.1 | 342.8 |
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For The Year Ended December 31, 2006 | ||||||||||||||||||||||||
Historical | ||||||||||||||||||||||||
BCH | ||||||||||||||||||||||||
Predecessor | Successor | Field | Condensed | |||||||||||||||||||||
Jan. 1- | Jul. 1- | Jan. 1- | Pro Forma | Pro Forma | ||||||||||||||||||||
Graphic | June 30 | Dec. 31 | Aug. 16 | Adjustments | Combined | |||||||||||||||||||
In millions, except per share amounts | ||||||||||||||||||||||||
Net Sales | $ | 2,321.7 | $ | 789.4 | $ | 964.2 | $ | 229.2 | $ | (31.5 | )(c) | $ | 4,273.0 | |||||||||||
Cost of Sales | 2,020.6 | 699.0 | 881.3 | 197.9 | (31.5 | )(c) | 3,788.7 | |||||||||||||||||
9.2 | (e) | |||||||||||||||||||||||
12.2 | (f) | |||||||||||||||||||||||
Selling, General and Administrative | 197.0 | 75.4 | 89.7 | 25.1 | 11.2 | (f) | 398.4 | |||||||||||||||||
Research, Development and Engineering | 10.8 | — | — | — | 10.8 | |||||||||||||||||||
Other (Income) Expense, net | (0.5 | ) | (0.1 | ) | — | 1.3 | 0.7 | |||||||||||||||||
Income (Loss) from Operations | 93.8 | 15.1 | (6.8 | ) | 4.9 | (32.6 | ) | 74.4 | ||||||||||||||||
Interest Income | 0.6 | 2.7 | — | 3.3 | ||||||||||||||||||||
Interest Expense | (172.0 | ) | (0.6 | ) | (48.5 | ) | (3.8 | ) | 22.7 | (b) | (202.2 | ) | ||||||||||||
Other | — | — | (0.4 | ) | — | (0.4 | ) | |||||||||||||||||
(Loss) Income before Income Taxes and Equity in Net Earnings of Affiliates | (77.6 | ) | 14.5 | (53.0 | ) | 1.1 | (9.9 | ) | (124.9 | ) | ||||||||||||||
Income Tax Expense | (20.8 | ) | (5.8 | ) | (0.5 | ) | (0.8 | ) | (27.9 | ) | ||||||||||||||
Loss before Equity in Net Earnings of Affiliates | (98.4 | ) | 8.7 | (53.5 | ) | 0.3 | (9.9 | ) | (152.8 | ) | ||||||||||||||
Equity in Net Earnings of Affiliates | 1.0 | — | — | — | 1.0 | |||||||||||||||||||
(Loss) Income from Continuing Operations | $ | (97.4 | ) | $ | 8.7 | $ | (53.5 | ) | $ | 0.3 | $ | (9.9 | ) | $ | (151.8 | ) | ||||||||
Loss Per Share - Continuing Operations: | ||||||||||||||||||||||||
Basic | (0.48 | ) | (0.44 | ) | ||||||||||||||||||||
Diluted | (0.48 | ) | (0.44 | ) | ||||||||||||||||||||
Weighted Average Shares Outstanding: | ||||||||||||||||||||||||
Basic | 201.1 | 141.1 | 342.2 | |||||||||||||||||||||
Diluted | 201.1 | 141.1 | 342.2 |
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Note 1. | Basis of Presentation |
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Note 2. | Pro Forma Transactions |
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Estimated Purchase Price | $ | 686.1 | ||
Estimated Acquisition Costs | 26.0 | |||
Assumed Debt | 1,157.0 | |||
Total Estimated Purchase Consideration | $ | 1,869.1 | ||
Preliminary Allocation of Purchase Price: | ||||
Property, Plant and Equipment | 703.0 | |||
Inventories | 247.9 | |||
Customer Relationships | 458.5 | |||
Patents and Trademarks | 8.1 | |||
Other Identifiable Intangible Assets(a) | 9.3 | |||
Deferred Taxes(b) | — | |||
Other Net Assets: | ||||
Cash | 85.9 | |||
Receivables, Net | 207.1 | |||
Other Current Assets | 13.6 | |||
Other Assets | 5.1 | |||
Accounts Payable | (154.0 | ) | ||
Accrued Liabilities | (86.7 | ) | ||
Other Noncurrent Liabilities | (49.6 | ) | ||
Net Assets Acquired(c) | 21.4 | |||
Goodwill | 420.9 | |||
Total Estimated Fair Value of Net Assets Acquired | $ | 1,869.1 | ||
(a) | Includes other identifiable intangible assets consisting of non-compete agreements of $10.1 million, favorable lease agreements of $1.2 million, and unfavorable supply contracts of $2.0 million. The non-compete agreements, which resulted from BCH’s acquisitions of CPD and the Field Companies, have estimated remaining lives of 3.2 years and annual amortization expense of $3.2 million. |
(b) | Graphic recorded deferred taxes of $169.7 million as a result of thestep-up in net assets. These deferred taxes were offset by the release of a corresponding amount of the valuation allowance related to deferred tax assets associated with net operating losses of Graphic. As such, there was no impact on goodwill in the purchase price allocation. |
(c) | At date of acquisition, it was assumed that the book value approximated fair market value. |
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Note 3. | Pro Forma Adjustments for the Acquisition |
• | Issuance of 1,725,591 shares of common stock in payment of restricted stock units granted under the Graphic Packaging Corporation 2004 Stock and Incentive Compensation Plan (the “2004 Plan”). Such restricted stock units vest and become payable pursuant to Section 18.1(b) of the 2004 Plan upon a change of control. “Change of Control” is defined in the 2004 Plan to include an acquisition by any person of thirty percent (30%) or more of the combined voting power of the then outstanding voting securities of Graphic entitled to vote generally in the election of directors, which will occur upon the consummation of the merger and the exchange. The unaudited pro forma condensed combined statement of operations does not reflect the $4.2 million non-cash expense nor the $4.6 million cash expense for the vesting and payout of the restricted stock units, as these amounts are directly related to the transactions and are not expected to have a continuing impact on operations. |
• | Acquisition costs of approximately $26.0 million. |
Refinanced | ||||||||
Pro Forma Combined | ||||||||
Existing Combined | Debt at | |||||||
Debt at September 30, 2007 | September 30, 2007 | |||||||
Bank financing | $ | 2,196.5 | $ | 2,196.5 | ||||
Senior and senior subordinated notes | 850.0 | 850.0 | ||||||
Revolving credit facilities | 50.0 | 8.1 | ||||||
Other debt | 10.2 | 10.2 | ||||||
Total | $ | 3,106.7 | $ | 3,064.8 | ||||
Short-term debt | $ | 29.3 | ||
Long-term debt | 3,035.5 | |||
Total debt | $ | 3,064.8 | ||
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f. | The fair market value of acquired intangible assets was adjusted as follows at September 30, 2007: |
Customer Relationships | $ | 344.1 | ||
Trademarks and Patents | 2.6 | |||
Lease and Supply Contracts | 2.2 | |||
Total fair market value adjustment to intangible assets at September 30, 2007 | $ | 348.9 | ||
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Note 4. | Unaudited Pro Forma Loss Per Share |
Year Ended | Nine Months Ended | ||||||||||||||||||||||||
December 31, 2006 | September 30, 2007 | ||||||||||||||||||||||||
Per share | Per Share | ||||||||||||||||||||||||
Loss | Shares | Amount | Loss | Shares | Amount | ||||||||||||||||||||
Loss per basic share | $ | (151.8 | ) | 342.2 | $ | (0.44 | ) | $ | (59.2 | ) | 342.8 | $ | (0.17 | ) | |||||||||||
Loss per diluted share | $ | (151.8 | ) | 342.2 | $ | (0.44 | ) | $ | (59.2 | ) | 342.8 | $ | (0.17 | ) |
Nine Months | ||||||||
Year Ended | Ended | |||||||
In millions of shares | December 31, 2006 | September 30, 2007 | ||||||
Weighted average Graphic shares outstanding | 201.1 | 201.7 | ||||||
Shares issued in the transactions | 139.4 | 139.4 | ||||||
Shares issued for restricted stock units | 1.7 | 1.7 | ||||||
Total | 342.2 | 342.8 |
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• | Folding Cartons & Paperboard | |
• | Multi-wall Bags | |
• | Flexible Packaging/Labels |
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Type of Facility and Location | Name of Union | Expiration of Agreement | ||
Paperboard Mill: | ||||
Pekin, IL | USW | October 31, 2005 | ||
Middletown, OH | USW | June 1, 2008 | ||
Battlecreek MI | IBT | April 2, 2010 | ||
Battlecreek MI | IAM | April 2, 2010 | ||
Battlecreek MI | IBEW | April 2, 2010 | ||
Battlecreek MI | IUOE | April 2, 2010 | ||
Wabash, IN | USW | June 19, 2010 | ||
Philadelphia, PA | IBFO | June 19, 2010 | ||
Philadelphia, PA | IUOE | June 19, 2010 | ||
Philadelphia, PA | USW | June 19, 2010 | ||
Santa Clara, CA | IBT | August 31, 2010 |
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Type of Facility and Location | Name of Union | Expiration of Agreement | ||
Folding Cartons: | ||||
Queretaro, MX | Sindicato de Trabajadores | March 1, 2008 | ||
Fort Wayne, IN | IBT | April 30, 2008 | ||
Middletown, OH | USW | June 1, 2008 | ||
Carol Stream, IL | IBT | June 1, 2008 | ||
Pacific Carton, MO | IBT | July 31, 2008 | ||
Stone Mountain, GA | IBT | September 15, 2008 | ||
Muncie, IN | IBT | October 8, 2008 | ||
Valley Forge, PA | IBFO | June 19, 2009 | ||
Valley Forge, PA | USW | June 19, 2009 | ||
Solon, OH | USW | June 19, 2009 | ||
Morris, IL | USW | July 1, 2009 | ||
Muncie, IN | UFCW | August 1, 2009 | ||
Greensboro, NC | IBT | November 15, 2009 | ||
Santa Clara, CA | IBT | August 31, 2010 | ||
Middletown, OH | IBT | August 31, 2010 | ||
Irvine, CA | IBT | August 31, 2010 | ||
Fort Wayne, IN | IBT | February 19, 2011 | ||
Renton, WA | IBT | February 28, 2011 | ||
Renton, WA | IBT | April 30, 2011 | ||
Carol Stream, IL | IAM | May 2, 2011 | ||
Multi-wall Bags: | ||||
Salt Lake City, UT | IBT | June 15, 2010 | ||
Wellsburg, WV | USW | May 14, 2008 | ||
Cantonment, FL | USW | August 31, 2008 | ||
New Philadelphia, OH | USW | October 1, 2008 | ||
Kansas City, MO | USW | October 31, 2008 | ||
Arcadia, LA | USW | March 31, 2009 | ||
Louisville, KY | IBT | October 10, 2009 | ||
Jacksonville, AR | USW | November 1, 2009 | ||
Cantonment, FL | USW | December 31, 2009 | ||
Flexible Packaging/Labels/Ink: | ||||
Hodge, LA | USW | September 30, 2007 | ||
Brampton Ontario, CN | CEP | February 1, 2009 | ||
St. Charles, IL | IBT | July 2, 2008 | ||
St. Charles, IL | IBT | April 30, 2009 | ||
St. Charles, IL | IBT | November 1, 2009 | ||
Indianapolis, IN | IBT | June 30, 2011 | ||
Bellwood/Riverdale, IL | IBT | June 30, 2008 | ||
Elk Grove Village, IL | USW | September 30, 2008 | ||
Norwood, OH | USW | March 7, 2009 |
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Combined | |||||||||||||
Successor | Predecessor | Non-GAAP | |||||||||||
July 1, 2006 to | January 1, 2006 to | Year Ended | |||||||||||
December 31, 2006 | June 30, 2006 | December 31, 2006 | |||||||||||
In millions | |||||||||||||
Net Sales | $ | 964.2 | $ | 789.4 | $ | 1,753.6 | |||||||
Cost of Sales | 881.3 | 699.0 | 1,580.3 | ||||||||||
Selling, General and Administrative | 89.7 | 75.4 | 165.1 | ||||||||||
(Gain) Loss on Sale of Assets | — | (0.1 | ) | (0.1 | ) | ||||||||
Income (Loss) from Operations | (6.8 | ) | 15.1 | 8.3 | |||||||||
Interest Income | 2.7 | — | 2.7 | ||||||||||
Interest Expense | (48.5 | ) | (0.6 | ) | (49.1 | ) | |||||||
Other (Expense) Income, Net | (0.4 | ) | — | (0.4 | ) | ||||||||
Income (Loss) before Income Taxes | (53.0 | ) | 14.5 | (38.5 | ) | ||||||||
Income Tax Expense | 0.5 | 5.8 | 6.3 | ||||||||||
Net (Loss) Income | $ | (53.5 | ) | $ | 8.7 | $ | (44.8 | ) | |||||
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Combined | |||||||||||||
Successor | Predecessor | Non-GAAP | |||||||||||
July 1, 2006 to | January 1, 2006 to | Year Ended | |||||||||||
December 31, 2006 | June 30, 2006 | December 31, 2006 | |||||||||||
In millions | |||||||||||||
Net Sales: | |||||||||||||
Folding Carton and Paperboard | $ | 607.0 | $ | 443.4 | $ | 1,050.4 | |||||||
Multi-Wall Bag | 238.8 | 233.4 | 472.2 | ||||||||||
Flexible Packaging/Label | 107.0 | 112.6 | 219.6 | ||||||||||
Corporate/Other | 11.4 | — | 11.4 | ||||||||||
Total | $ | 964.2 | $ | 789.4 | $ | 1,753.6 | |||||||
Income (Loss) from Operations:(a) | |||||||||||||
Folding Carton and Paperboard | $ | 43.9 | $ | 4.6 | $ | 48.5 | |||||||
Multi-Wall Bag | 24.4 | 6.7 | 31.1 | ||||||||||
Flexible Packaging/Label | 4.1 | 3.8 | 7.9 | ||||||||||
Corporate/Other | (79.2 | ) | — | (79.2 | ) | ||||||||
Total | $ | (6.8 | ) | $ | 15.1 | $ | 8.3 | ||||||
(a) | Income (loss) from operations differs from segment profit as disclosed in Note 17 in the notes to BCH’s consolidated financial statements included in this proxy statement/prospectus. Segment profit as disclosed in BCH’s consolidated financial statements includes the allocation of interest expense and non-operating expense. |
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Combined | |||||||||||||
Non-GAAP | |||||||||||||
Successor | Predecessor | Nine Months | |||||||||||
July 1, 2006 to | January 1, 2006 to | Ended | |||||||||||
September 30, 2006 | June 30, 2006 | September 30, 2006 | |||||||||||
In millions | |||||||||||||
Net Sales | $ | 463.0 | $ | 789.4 | $ | 1,252.4 | |||||||
Cost of Sales | 416.0 | 699.0 | 1,115.0 | ||||||||||
Selling, General and Administrative | 37.0 | 75.4 | 112.4 | ||||||||||
Gain on Sale of Assets | — | (0.1 | ) | (0.1 | ) | ||||||||
Income from Operations | 10.0 | 15.1 | 25.1 | ||||||||||
Interest Income | 1.4 | — | 1.4 | ||||||||||
Interest Expense | (23.4 | ) | (0.6 | ) | (24.0 | ) | |||||||
Other Income, Net | 1.0 | — | 1.0 | ||||||||||
(Loss) Income before Income Tax Expense | (11.0 | ) | 14.5 | 3.5 | |||||||||
Income Tax Expense | 0.3 | 5.8 | 6.1 | ||||||||||
Net (Loss) Income | $ | (11.3 | ) | $ | 8.7 | $ | (2.6 | ) | |||||
Combined | |||||||||||||
Non-GAAP | |||||||||||||
Successor | Predecessor | Nine Months | |||||||||||
July 1, 2006 to | January 1, 2006 to | Ended | |||||||||||
September 30, 2006 | June 30, 2006 | September 30, 2006 | |||||||||||
In millions | |||||||||||||
Net Sales: | |||||||||||||
Folding Carton and Paperboard | $ | 284.0 | $ | 443.4 | $ | 727.4 | |||||||
Multi-Wall Bag | 120.7 | 233.4 | 354.1 | ||||||||||
Flexible Packaging/Label | 56.0 | 112.6 | 168.6 | ||||||||||
Corporate/Other | 2.3 | — | 2.3 | ||||||||||
Total | $ | 463.0 | $ | 789.4 | $ | 1,252.4 | |||||||
Income (Loss) From Operations: | |||||||||||||
Folding Carton and Paperboard | $ | 21.3 | $ | 4.6 | $ | 25.9 | |||||||
Multi-Wall Bag | 9.2 | 6.7 | 15.9 | ||||||||||
Flexible Packaging/Label | 3.6 | 3.8 | 7.4 | ||||||||||
Corporate/Other | (24.1 | ) | — | (24.1 | ) | ||||||||
Total | $ | 10.0 | $ | 15.1 | $ | 25.1 | |||||||
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Nine Months Ended September 30, | Year Ended December 31, | |||||||||||||||||||
Combined | Combined | |||||||||||||||||||
Successor | Non-GAAP | Non-GAAP | Predecessor | Predecessor | ||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | ||||||||||||||||
In millions | ||||||||||||||||||||
Net Sales: | ||||||||||||||||||||
Folding Carton and Paperboard | $ | 987.1 | $ | 727.4 | $ | 1,050.4 | $ | 903.1 | $ | 868.0 | ||||||||||
Multi-Wall Bag | 354.5 | 354.1 | 472.2 | 469.3 | 478.5 | |||||||||||||||
Flexible Packaging/Label | 169.3 | 168.6 | 219.6 | 212.0 | 194.7 | |||||||||||||||
Corporate/Other | 16.8 | 2.3 | 11.4 | — | — | |||||||||||||||
Total | $ | 1,527.7 | $ | 1,252.4 | $ | 1,753.6 | $ | 1,584.4 | $ | 1,541.2 | ||||||||||
Income (Loss) From Operations: | ||||||||||||||||||||
Folding Carton and Paperboard | $ | 90.2 | $ | 25.9 | $ | 48.5 | $ | 23.2 | $ | 27.5 | ||||||||||
Multi-Wall Bag | 25.0 | 15.9 | 31.1 | 18.4 | 21.6 | |||||||||||||||
Flexible Packaging/Label | 15.5 | 7.4 | 7.9 | 11.8 | 14.0 | |||||||||||||||
Corporate/Other | (64.9 | ) | (24.1 | ) | (79.2 | ) | — | — | ||||||||||||
Total | $ | 65.8 | $ | 25.1 | $ | 8.3 | $ | 53.4 | $ | 63.1 | ||||||||||
Nine Months Ended September 30, | ||||||||||||||||
Combined | ||||||||||||||||
Successor | Non-GAAP | Increase | Percent | |||||||||||||
2007 | 2006 | (Decrease) | Change | |||||||||||||
In millions | ||||||||||||||||
Folding Carton and Paperboard | $ | 987.1 | $ | 727.4 | $ | 259.7 | 35.7 | % | ||||||||
Multi-Wall Bag | 354.5 | 354.1 | 0.4 | 0.1 | % | |||||||||||
Flexible Packaging/Label | 169.3 | 168.6 | 0.7 | 0.4 | % | |||||||||||
Corporate/Other | 16.8 | 2.3 | 14.5 | n.m. | ||||||||||||
Total | $ | 1,527.7 | $ | 1,252.4 | $ | 275.3 | 22.0 | % | ||||||||
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Nine Months Ended September 30, | ||||||||||||||||
Combined | ||||||||||||||||
Successor | Non-GAAP | Increase | Percent | |||||||||||||
2007 | 2006 | (Decrease) | Change | |||||||||||||
In millions | ||||||||||||||||
Folding Carton and Paperboard | $ | 90.2 | $ | 25.9 | $ | 64.3 | n.m. | |||||||||
Multi-Wall Bag | 25.0 | 15.9 | 9.1 | n.m. | ||||||||||||
Flexible Packaging/Label | 15.5 | 7.4 | 8.1 | n.m. | ||||||||||||
Corporate/Other | (64.9 | ) | (24.1 | ) | (40.8 | ) | n.m. | |||||||||
Total | $ | 65.8 | $ | 25.1 | $ | 40.7 | n.m. | |||||||||
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Year Ended December 31, | ||||||||||||||||
Combined | ||||||||||||||||
Non-GAAP | Predecessor | Percentage | ||||||||||||||
2006 | 2005 | Increase | Change | |||||||||||||
In millions | ||||||||||||||||
Folding Carton and Paperboard | $ | 1,050.4 | $ | 903.1 | $ | 147.3 | 16.3 | % | ||||||||
Multi-Wall Bag | 472.2 | 469.3 | 2.9 | 0.6 | % | |||||||||||
Flexible Packaging/Label | 219.6 | 212.0 | 7.6 | 3.6 | % | |||||||||||
Corporate/Other | 11.4 | — | 11.4 | n.m. | ||||||||||||
Total | $ | 1,753.6 | $ | 1,584.4 | $ | 169.2 | 10.7 | % | ||||||||
Year Ended December 31, | ||||||||||||||||
Combined | ||||||||||||||||
Non-GAAP | Predecessor | Increase | Percent | |||||||||||||
2006 | 2005 | (Decrease) | Change | |||||||||||||
In millions | ||||||||||||||||
Folding Carton and Paperboard | $ | 48.5 | $ | 23.2 | $ | 25.3 | 109.1 | % | ||||||||
Multi-Wall Bag | 31.1 | 18.4 | 12.7 | 69.0 | % | |||||||||||
Flexible Packaging/Label | 7.9 | 11.8 | (3.9 | ) | (33.1 | )% | ||||||||||
Corporate/Other | (79.2 | ) | — | (79.2 | ) | n.m. | ||||||||||
Total | $ | 8.3 | $ | 53.4 | $ | (45.1 | ) | (84.5 | )% | |||||||
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Year Ended December 31, | ||||||||||||||||
Predecessor | Predecessor | Increase | Percent | |||||||||||||
2005 | 2004 | (Decrease) | Change | |||||||||||||
In millions | ||||||||||||||||
Folding Carton and Paperboard | $ | 903.1 | $ | 868.0 | $ | 35.1 | 4.0 | % | ||||||||
Multi-Wall Bag | 469.3 | 478.5 | (9.2 | ) | (1.9 | )% | ||||||||||
Flexible Packaging/Label | 212.0 | 194.7 | 17.3 | 8.9 | % | |||||||||||
Total | $ | 1,584.4 | $ | 1,541.2 | $ | 43.2 | 2.8 | % | ||||||||
Year Ended December 31, | ||||||||||||||||
Predecessor | Predecessor | Percent | ||||||||||||||
2005 | 2004 | (Decrease) | Change | |||||||||||||
In millions | ||||||||||||||||
Folding Carton and Paperboard | $ | 23.2 | $ | 27.5 | $ | (4.3 | ) | (15.6 | )% | |||||||
Multi-Wall bag | 18.4 | 21.6 | (3.2 | ) | (14.8 | )% | ||||||||||
Flexible Packaging/Label | 11.8 | 14.0 | (2.2 | ) | (15.7 | )% | ||||||||||
Total | $ | 53.4 | $ | 63.1 | $ | (9.7 | ) | (15.4 | )% | |||||||
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Successor | Predecessor | Combined | |||||||||||
July 1, | January 1, | Non-GAAP | |||||||||||
2006 to | 2006 to | Year Ended | |||||||||||
December 31, | June 30, | December 31, | |||||||||||
In millions | 2006 | 2006 | 2006 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||
Net (Loss) Income | $ | (53.5 | ) | $ | 8.7 | $ | (44.8 | ) | |||||
Noncash Items Included in Net (Loss) Income: | |||||||||||||
Depreciation and Amortization | 42.5 | 20.4 | 62.9 | ||||||||||
Deferred Income Taxes | (0.2 | ) | (10.7 | ) | (10.9 | ) | |||||||
Amortization of Deferred Debt Issuance Costs | 1.8 | — | 1.8 | ||||||||||
Asset Retirements Gain | — | (0.1 | ) | (0.1 | ) | ||||||||
Changes in Operating Assets & Liabilities: | |||||||||||||
Accounts Receivable, Net | (143.5 | ) | 3.6 | (139.9 | ) | ||||||||
Inventories | 59.5 | (8.4 | ) | 51.1 | |||||||||
Prepaid Expenses and Other Current Assets | 0.8 | (2.2 | ) | (1.4 | ) | ||||||||
Accounts Payable and Accrued Liabilities | 50.7 | (12.9 | ) | 37.8 | |||||||||
Other, Net | 0.8 | 0.1 | 0.9 | ||||||||||
Net Cash Used in Operating Activities | (41.1 | ) | (1.5 | ) | (42.6 | ) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||
Capital Spending | (21.4 | ) | (39.0 | ) | (60.4 | ) | |||||||
Acquisitions, Net of Cash Received | (1,281.4 | ) | — | (1,281.4 | ) | ||||||||
Proceeds from Disposal of Property/Other | 0.3 | 0.3 | 0.6 | ||||||||||
Net Cash Used in Investing Activities | (1,302.5 | ) | (38.7 | ) | (1.341.2 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||
Net (Repayments) Borrowings of Long-term Debt | (2.8 | ) | 0.1 | (2.7 | ) | ||||||||
Proceeds from Debt | 1,165.0 | — | 1,165.0 | ||||||||||
Cash Contribution from Parent | 305.0 | — | 305.0 | ||||||||||
Deferred Debt Issuance Costs | (24.4 | ) | — | (24.4 | ) | ||||||||
Net Advances from SSCE | — | 40.1 | 40.1 | ||||||||||
Net Cash Provided by Financing Activities | 1,442.8 | 40.2 | 1,483.0 | ||||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | — | — | — | ||||||||||
Net Increase in Cash and Equivalents | 99.2 | — | 99.2 | ||||||||||
Cash and Equivalents at Beginning of Period | — | — | — | ||||||||||
CASH AND EQUIVALENTS AT END OF PERIOD | $ | 99.2 | $ | — | $ | 99.2 | |||||||
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Combined | |||||||||||||
Successor | Predecessor | Non-GAAP | |||||||||||
Three Months Ended | Six Months Ended | Nine Months Ended | |||||||||||
In millions | September 30, 2006 | June 30, 2006 | September 30, 2006 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||
Net (Loss) Income | $ | (11.3 | ) | $ | 8.7 | $ | (2.6 | ) | |||||
Noncash Items Included in Net (Loss) Income: | |||||||||||||
Depreciation and Amortization | 17.7 | 20.4 | 38.1 | ||||||||||
Deferred Income Taxes | — | (10.7 | ) | (10.7 | ) | ||||||||
Amortization of Deferred Debt Issuance Costs | 1.1 | — | 1.1 | ||||||||||
Asset Retirements Gain | — | (0.1 | ) | (0.1 | ) | ||||||||
Changes in Operating Assets and Liabilities: | |||||||||||||
Accounts Receivable, Net | (168.1 | ) | 3.6 | (164.5 | ) | ||||||||
Inventories | 7.3 | (8.4 | ) | (1.1 | ) | ||||||||
Prepaid Expenses and Other Current Assets | (1.9 | ) | (2.2 | ) | (4.1 | ) | |||||||
Accounts Payable and Accrued Liabilities | 78.5 | (12.9 | ) | 65.6 | |||||||||
Other, Net | (2.6 | ) | 0.1 | (2.5 | ) | ||||||||
Net Cash Used in Operating Activities | (79.3 | ) | (1.5 | ) | (80.8 | ) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||
Capital Spending | (8.9 | ) | (39.0 | ) | (47.9 | ) | |||||||
Acquisitions, Net of Cash Received | (333.1 | ) | — | (333.1 | ) | ||||||||
Proceeds from Disposal of Property/Other | — | 0.3 | 0.3 | ||||||||||
Net Cash Used in Investing Activities | (342.0 | ) | (38.7 | ) | (380.7 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||
Net (Repayments) Borrowings of Long-term Debt | 269.5 | 0.1 | 269.6 | ||||||||||
Cash Contribution from Parent | 65.0 | — | 65.0 | ||||||||||
Deferred Debt Issuance Costs | (0.4 | ) | — | (0.4 | ) | ||||||||
Net Advances from SSCE | — | 40.1 | 40.1 | ||||||||||
Net Cash Provided by Financing Activities | 334.1 | 40.2 | 374.3 | ||||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | — | — | — | ||||||||||
Decrease in cash and cash equivalents | (87.2 | ) | — | (87.2 | ) | ||||||||
Cash and cash equivalents: | |||||||||||||
Beginning of the period | 164.5 | — | 164.5 | ||||||||||
End of the period | $ | 77.3 | $ | — | $ | 77.3 | |||||||
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As of | Year Ended December 31, | |||||||||||
September 30, | Successor | Predecessor | ||||||||||
2007 | 2006 | 2005 | ||||||||||
In millions | ||||||||||||
First-Lien Term Loan | $ | 816.8 | $ | 822.9 | $ | — | ||||||
Second-Lien Term Loan | 330.0 | 330.0 | — | |||||||||
Revolving Credit Facility | 10.0 | 10.0 | — | |||||||||
Industrial Revenue Bond | — | — | 10.0 | |||||||||
Other Debt | — | — | 4.9 | |||||||||
Obligations under Capitalized Leases | 0.2 | 0.4 | 2.0 | |||||||||
Total Debt | $ | 1,157.0 | $ | 1,163.3 | $ | 16.9 | ||||||
Less: Current Portion of Long-Term Debt | (10.5 | ) | (10.5 | ) | (0.8 | ) | ||||||
Total Long-Term Debt | 1,146.5 | $ | 1,152.8 | $ | 16.1 | |||||||
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Payment Due by Year | ||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | After 2011 | Total | ||||||||||||||||||||||
In millions | ||||||||||||||||||||||||||||
Long-term debt | $ | 10.5 | $ | 8.4 | $ | 8.3 | $ | 8.3 | $ | 6.2 | $ | 1,121.6 | $ | 1,163.3 | ||||||||||||||
Operating leases | 28.7 | 22.2 | 18.5 | 14.5 | 10.6 | 25.3 | 119.8 | |||||||||||||||||||||
Other commitments(a) | 95.8 | 91.2 | 90.2 | 90.0 | 89.3 | 148.8 | 605.3 | |||||||||||||||||||||
Purchase obligations(b) | 32.3 | 16.8 | — | — | — | — | 49.1 | |||||||||||||||||||||
Pension and postretirement funding | 4.4 | — | — | — | — | — | 4.4 | |||||||||||||||||||||
Total contractual obligations(c) | $ | 171.7 | $ | 138.6 | $ | 117.0 | $ | 112.8 | $ | 106.1 | $ | 1,295.7 | $ | 1,941.9 | ||||||||||||||
(a) | Other commitments primarily include scheduled interest payments on BCH’s long-term debt. | |
(b) | Purchase obligations primarily consist of commitments related to paper, paper machine supplies and natural gas. | |
(c) | Some of the figures included in this table are based on management’s estimates and assumptions about these obligations. Because these estimates and assumptions are necessarily subjective, the obligations BCH will actually pay in the future periods may vary from those reflected in the table. |
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Expected Maturity Date | ||||||||||||||||
Fair | ||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | Thereafter | Total | Value | |||||||||
In millions | ||||||||||||||||
Total Debt Variable Rate | $10.5 | $8.4 | $8.3 | $8.3 | $6.2 | $1,121.6 | $1,163.3 | $1,163.3 | ||||||||
Average Interest Rate, spread range is 1.75% — 5.00% | LIBOR+ spread | LIBOR+ spread | LIBOR+ spread | LIBOR+ spread | LIBOR+ spread | LIBOR+ spread |
Expected Maturity Date | ||||||||||||||||||||
Fair | ||||||||||||||||||||
2007 | 2008 | 2009 | Total | Value | ||||||||||||||||
In millions | ||||||||||||||||||||
Interest rate Swaps | ||||||||||||||||||||
Notional | $ | 20.0 | $ | 40.0 | $ | 510.0 | $ | 570.0 | $ | (0.9 | ) | |||||||||
Average Pay Rate | 5.10 | % | 5.10 | % | 5.10 | % | ||||||||||||||
3-Month | 3-Month | 3-Month | ||||||||||||||||||
Average Receive Rate | LIBOR | LIBOR | LIBOR |
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• | convenience through ease of carrying, storage, delivery and food preparation for consumers; | |
• | a smooth surface printed with high-resolution, multi-color graphic images that help improve brand awareness and visibility of products on store shelves; and | |
• | durability, stiffness, wet and dry tear strength; leak, abrasion and heat resistance; barrier protection from moisture, oxygen, oils and greases, as well as enhanced microwave heating performance. |
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• | beverage, including beer, soft drinks, water and juices; | |
• | food, including cereal, desserts, frozen, refrigerated and microwavable foods and pet foods; | |
• | prepared foods, including snacks, quick-serve foods in restaurants and food service products; and | |
• | household products, including dishwasher and laundry detergent, health care and beauty aids and tissues and papers. |
• | beverage multiple packaging — Fridge Vendor® and 6, 8, 12, 18, 24, 30 and 36 unit multi-packs for beer, soft drinks, water and juices; | |
• | active microwave technologies — Micro-Rite®, Microrite Technology Browns, Crisps, Cooks Evenlytm, Qwik Crisp® trays, Quilt Wave™ and MicroFlex® Q substrates that improve the preparation of foods in the microwave; | |
• | easy opening and closing features — pour spouts and sealable liners; |
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• | IntegraPak — Graphic’s alternative to traditional“bag-in-box” packaging; and | |
• | alternative containers — Z-Flute®, Graphic’s answer to corrugated box strength, with the look, feel and consistency of a paperboard folding carton. |
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• | an audit committee | |
• | a compensation and benefits committee; and | |
• | a nominating and corporate governance committee |
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• | each stockholder that is known by Graphic to be the beneficial owner of more than 5% of the Graphic common stock or who, as a result of the completion of the transactions, will own beneficially 5% or more of New Graphic common stock; | |
• | each director of Graphic and New Graphic; | |
• | each named executive officer of Graphic; and | |
• | the directors and executive officers of Graphic and New Graphic as a group. |
Beneficial Ownership of | Pro Forma Beneficial | |||||||||||||||
Graphic | Ownership of New Graphic | |||||||||||||||
Number of | Number of | |||||||||||||||
Name | Shares | Percentage | Shares | Percentage | ||||||||||||
Beneficial Owners of 5% or More: | ||||||||||||||||
Grover C. Coors Trust(1) | 51,211,864 | 25.48 | % | 51,211,864 | 14.94 | % | ||||||||||
Jeffrey H. Coors(1)(2) | 63,569,522 | 31.35 | % | 63,450,418 | 18.42 | % | ||||||||||
Clayton, Dubilier & Rice Fund V Limited Partnership(3) | 34,222,500 | 17.03 | % | 34,222,500 | 9.98 | % | ||||||||||
EXOR Group S.A.(4) | 34,222,500 | 17.03 | % | 34,222,500 | 9.98 | % | ||||||||||
TPG BCH Entities(5) | — | — | 132,158,875 | 38.55 | % | |||||||||||
HWH Investment PTE Ltd.(6) | 10,545,400 | 5.25 | % | 10,545,400 | 3.08 | % | ||||||||||
Directors and Named Executive Officers of Graphic: | ||||||||||||||||
John D. Beckett(7) | 89,707 | * | 89,707 | * | ||||||||||||
G. Andrea Botta(8) | 81,637 | * | 81,637 | * | ||||||||||||
Kevin J. Conway(9) | — | * | — | * | ||||||||||||
William R. Fields | 20,080 | * | 20,080 | * | ||||||||||||
Harold R. Logan, Jr.(10) | 59,808 | * | 59,808 | * | ||||||||||||
John R. Miller | 43,247 | * | 43,247 | * | ||||||||||||
David W. Scheible(11) | 403,954 | * | 606,753 | * | ||||||||||||
Robert W. Tieken | 41,287 | * | 41,287 | * | ||||||||||||
Daniel J. Blount(12) | 378,954 | * | 472,757 | * | ||||||||||||
Stephen M. Humphrey(13) | 5,896,730 | 2.85 | % | 6,298,163 | 1.81 | % | ||||||||||
Michael R. Schmal(14) | 458,211 | * | 548,195 | * |
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Beneficial Ownership of | Pro Forma Beneficial | |||||||||||||||
Graphic | Ownership of New Graphic | |||||||||||||||
Number of | Number of | |||||||||||||||
Name | Shares | Percentage | Shares | Percentage | ||||||||||||
Additional Directors of New Graphic: | ||||||||||||||||
George V. Bayly(15) | — | — | 598,433 | * | ||||||||||||
Kelvin L. Davis(16) | — | — | — | — | ||||||||||||
Jack A. Fusco | — | — | — | — | ||||||||||||
Jeffrey Liaw(17) | — | — | — | — | ||||||||||||
Michael G. MacDougall(18) | — | — | — | — | ||||||||||||
All directors and executive officers of Graphic as a group (16 persons)(19) | 72,092,158 | 34.33 | % | — | — | |||||||||||
All directors and executive officers of New Graphic as a group (21 persons)(20) | 73,663,800 | 20.89 | % |
(1) | Pursuant to the stockholders agreement dated March 25, 2003 among Graphic, the Coors Family Stockholders, certain related Coors family trusts and a related foundation, the CDR Fund and EXOR (the “2003 stockholder agreement”), certain members of the Coors family and related entities, including the Grover C. Coors Trust, have designated and appointed Jeffrey H. Coors as their attorney-in-fact to perform all obligations under such agreement. As to all other matters, including the merger and the exchange, they have retained voting power, and such persons have sole dispositive power over such shares. The business address for Jeffrey H. Coors is Graphic Packaging Corporation, 814 Livingston Court, Marietta, Georgia 30067. The shares of Graphic common stock are owned of record by the following Coors Family Stockholders in the amounts set forth below: |
No. of Shares | ||||
Currently | ||||
Party to the Stockholders Agreement | Beneficially Owned | |||
Adolph Coors Jr. Trust | 2,800,000 | |||
Augusta Coors Collbran Trust | 1,015,350 | |||
Bertha Coors Munroe Trust | 1,140,490 | |||
Grover C. Coors Trust | 51,211,864 | |||
Herman F. Coors Trust | 1,435,000 | |||
Janet H. Coors Irrevocable Trust f/b/o Frances M. Baker | 59,356 | |||
Janet H. Coors Irrevocable Trust f/b/o Frank E. Ferrin | 59,354 | |||
Janet H. Coors Irrevocable Trust f/b/o Joseph J. Ferrin | 59,354 | |||
Louise Coors Porter Trust | 920,220 | |||
May Kistler Coors Trust | 1,726,652 | |||
Darden K. Coors | 17,796 | |||
John K. Coors | 4,592 | |||
Joseph Coors Jr. | 30,247 | |||
Peter H. Coors | 61,256 | |||
William K. Coors* | 2,000 | |||
Adolph Coors Foundation | 503,774 | |||
61,047,305 | ||||
(2) | The amount shown includes (i) 53,429 shares held in joint tenancy with spouse, (ii) 140,848 stock units held in the Company’s 401(k) savings plan, (iii) 250 shares held by a Graphic predecessor’s Payroll Stock Ownership Plan, (iv) 500 shares held by Jeffrey H. Coors Family, Ltd., (v) 30,000 shares held by Mr. Coors’ wife, and (vii) an aggregate of 61,050,518 shares attributable to Mr. Coors solely by virtue of the 2003 stockholders agreement. The amount shown also includes 1,603,489 shares subject to stock |
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options exercisable within 60 days and 187,120 RSUs that are vested within 60 days. Mr. Coors’ pro forma beneficial ownership of New Graphic includes the number of shares set forth in items (i)-(v) and an aggregate of 60,931,414 shares attributed to Mr. Coors solely by virtue of the stockholders agreement and voting agreement. | ||
(3) | Associates V is the general partner of the CDR Fund and has the power to direct the CDR Fund as to the voting and disposition of its shares of Graphic common stock. Associates II is the managing general partner of Associates V and has the power to direct Associates V as to its direction of the CDR Fund’s voting and disposition of shares. Associates II is controlled by a board of directors consisting of B. Charles Ames, Michael G. Babiarz, Kevin J. Conway, Donald J. Gogel, Ned C. Lautenbach, David A. Novak, Huw Phillips, Roberto Quarta, Joseph L. Rice, III, Christian Rochat, Richard J. Schnall, Nathan Sleeper, George W. Tamke and David H. Wasserman, and its officers are Messrs. Conway, Gogel and Rice, along with Theresa A. Gore. The officers of Associates II are authorized and empowered, subject to the board of directors approval in certain circumstances, to act on behalf of Associates II and may be deemed to share beneficial ownership of the shares of Graphic common stock owned by the CDR Fund. Each of Associates V, Associates II and the other persons named above expressly disclaims beneficial ownership of the shares owned by the CDR Fund. The business address for each of the CDR Fund, Associates V, Associates II and each of the other persons named above is 1403 Foulk Road, Suite 106, Wilmington, Delaware 19803. | |
(4) | Giovanni Agnellie C.S.a.p.az., an Italian company, is the beneficial owner of essentially all of the equity interests of EXOR Group S.A. The address of Giovanni Agnellie C.S.a.p.az.’s principal business and principal office is via del Carmine 10, presso Simon fiduciaria S.p.a., 10122 Turin, Italy. Giovanni Agnellie C.S.a.p.az. is deemed to be controlled by its general partners, Messrs. Tiberto Brandolini d’Adda, Gianluigi Gabetti, John Philip Elkann and Alessandro Giovanni Nasi. | |
(5) | These shares of New Graphic common stock are owned of record by the following entities (together, the “TPG BCH Entities”) in the amount set forth below: |
Entity | Shares | |||
TPG Bluegrass IV, L.P. | 24,648,258 | |||
TPG Bluegrass IV-AIV 2, L.P. | 41,431,180 | |||
TPG Bluegrass V, L.P. | 23,929,218 | |||
TPG Bluegrass V-AIV 2, L.P. | 41,843,729 | |||
TPG FOF V-A, L.P. | 172,052 | |||
TPG FOF V-B, L.P. | 134,439 |
TPG Advisors IV, Inc. is the general partner of TPG GenPar IV, L.P., and TPG GenPar IV, L.P. is the general partner of each of TPG Bluegrass IV, L.P. and TPG Bluegrass IV-AIV 2, L.P. TPG Advisors V, Inc. is the general partner of TPG GenPar V, L.P., and TPG GenPar V, L.P. is the general partner of each of TPG Bluegrass V, L.P. and TPG Bluegrass V-AIV 2, L.P. Messrs. David Bonderman and James G. Coulter are directors, officers and the sole shareholders of TPG Advisors IV, Inc. and TPG Advisors V, Inc., and may be deemed to be beneficial owners of securities owned directly by the TPG BCH Entities. The address of each of the entities and individuals listed above isc/o TPG Capital, L.P., 301 Commerce Street, Suite 3300, Fort Worth, Texas 76102. | ||
(6) | The beneficial owner of HWH Investment Pte. Ltd. is Government of Singapore Investment Corporation (Ventures) Pte Ltd, which is beneficially owned by Minister for Finance Inc. of the Government of Singapore. The business address for HWH Investment Pte. Ltd. is 168 Robinson Road, #37-01 Capital Tower, Singapore 068912. The number of shares beneficially owned is as of December 31, 2005 according to Amendment No. 1 to Schedule 13G/A filed with the SEC on February 15, 2006. | |
(7) | The amount shown includes 2,000 shares subject to stock options exercisable within 60 days. |
(8) | The amount shown includes 76,373 shares of phantom stock that are fully vested but not payable until Mr. Botta’s retirement as a director of Graphic. |
(9) | Pursuant to the terms of his employment, all of Mr. Conway’s compensation for service as a director of Graphic, including all equity awards, is assigned to CD&R. |
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(10) | The amount shown includes 2,000 shares subject to stock options exercisable within 60 days. | |
(11) | The amount shown includes 4,253 stock units held in GPIC’s 401(k) savings plan, 163,710 shares subject to stock options exercisable within 60 days and 54,379 RSUs that are vested within 60 days. Mr. Scheible’s pro forma beneficial ownership of New Graphic includes 257,178 shares of common stock to be issued upon the payout of RSUs granted under the Graphic 2004 Stock and Incentive Compensation Plan (the “2004 Plan”). | |
(12) | The amount shown includes 189,304 shares subject to stock options exercisable within 60 days and 34,249 RSUs that are vested within 60 days. Mr. Blount’s pro forma beneficial ownership of New Graphic includes 128,052 shares of common stock to be issued upon the payout of RSUs granted under the Graphic 2004 Plan. | |
(13) | The amount shown includes 5,500,176 shares subject to stock options exercisable within 60 days and 177,660 RSUs that are vested within 60 days. Mr. Humphrey’s pro forma beneficial ownership of New Graphic includes 579,093 shares of common stock to be issued upon the payout of RSUs granted under the Graphic 2004 Plan. | |
(14) | The amount shown includes 210,492 shares subject to stock options exercisable within 60 days and 43,718 RSUs that are vested within 60 days. Mr. Schmal’s pro forma beneficial ownership of New Graphic includes 133,702 shares of common stock to be issued upon the payout of RSUs issued under the Graphic 2004 Plan. | |
(15) | The amount shown consists of shares of New Graphic common stock that will be issued to BCH Management, LLC in the transactions and subsequently distributed to Mr. Bayly. | |
(16) | Mr. Davis is a partner in TPG Capital, L.P., which is affiliated with the TPG BCH Entities. |
(17) | Mr. Liaw is a vice president of TPG Capital, L.P., which is affiliated with the TPG BCH Entities. |
(18) | Mr. MacDougall is a partner in TPG Capital, L.P., which is affiliated with the TPG BCH Entities. |
(19) | The amount shown includes 8,330,502 shares subject to stock options that are exercisable within 60 days and 718,241 RSUs and shares of phantom stock that are vested within 60 days. |
(20) | The amount shown includes 8,330,502 shares subject to stock options that are exercisable within 60 days and 718,241 RSUs and shares of phantom stock that are vested within 60 days. |
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• | Proposal 2 — Capitalization. Approval of provisions in New Graphic’s restated certificate of incorporation that will provide that the authorized capital stock will be 1.1 billion shares, including 1 billion shares of common stock and 100 million shares of preferred stock. |
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• | discourage some types of transactions that may involve an actual or threatened change in control of New Graphic; | |
• | discourage certain tactics that may be used in proxy fights; | |
• | enhance the likelihood of continuity and stability in the composition of New Graphic’s board of directors; | |
• | ensure that New Graphic’s board of directors will have sufficient time to act in what the board believes to be in the best interests of New Graphic and its stockholders; and | |
• | encourage persons seeking to acquire control of New Graphic to consult first with New Graphic’s board to negotiate the terms of any proposed business combination or offer. |
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• | before that date, the board of directors approved either the business combination or the transaction in which such stockholder became an interested stockholder; | |
• | upon consummation of the transaction that resulted in the stockholder’s becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, other than statutorily excluded shares; or | |
• | on or after that date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of holders of at least 662/3% of New Graphic’s outstanding voting stock which is not owned by the interested stockholder. |
• | any breach of the director’s duty of loyalty to the corporation or its stockholders; | |
• | acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; | |
• | payments of unlawful dividends or unlawful stock repurchases or redemptions; or | |
• | any transaction from which the director derived an improper personal benefit. |
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• | the tenth day after the first public announcement by or communication to New Graphic that a person or group of affiliated or associated persons (referred to as an acquiring person) has acquired beneficial ownership of 15% or more of New Graphic’s outstanding common stock (the date of such announcement or communication is referred to as the stock acquisition time); or | |
• | the tenth business day after the commencement or first public announcement of the intention to commence a tender offer or exchange offer that would result in a person or group becoming an acquiring person. |
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• | New Graphic is acquired in a merger or other business combination and New Graphic is not the surviving corporation; or | |
• | 50% or more of the assets, cash flow or earning power of New Graphic and its subsidiaries (taken as a whole) is sold or transferred; |
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Current Graphic | New Graphic | |||
Stockholder Rights | Stockholder Rights | |||
Authorized Capital Stock | • The authorized capital stock of Graphic currently consists of 500 million shares of common stock, par value $0.01 per share, and 50 million shares of preferred stock, par value $0.01 per share. | • The authorized capital stock of New Graphic will consist of 1 billion shares of common stock, par value $0.01 per share, and 100 million shares of preferred stock, par value $0.01 per share. | ||
Number of Directors | • The Graphic board of directors currently consists of nine directors. | • The New Graphic board of directors will initially consist of thirteen directors. | ||
• The number of directors of Graphic may be fixed from time to time by resolution of the board of directors. | • The number of directors of New Graphic may be fixed from time to time solely by resolution of the board of directors and may not be fixed by any other person. | |||
Classification of board of directors | • Graphic has a classified board consisting of three classes of three directors each. | • New Graphic will have a classified board consisting of three classes. Initially, Class I will have five directors and Classes II and III will each have four directors. | ||
Removal of Directors | • Graphic directors may be removed from office, but only for cause, by the affirmative vote of the holders of at least a majority of the shares entitled to vote at an election of directors. | • New Graphic directors may be removed from office, but only for cause, by the affirmative vote of the holders of at least a majority of the shares entitled to vote at an election of directors. |
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Current Graphic | New Graphic | |||
Stockholder Rights | Stockholder Rights | |||
Quorum | • The presence in person or by proxy of the holders of record of one-third (1/3) of the voting power of the shares entitled to vote at a meeting of the stockholders constitutes a quorum. | • The presence in person or by proxy of the holders of record of a majority of the voting power of the shares entitled to vote at a meeting of the stockholders will constitute a quorum. | ||
Stockholders Rights Plan | • One stockholder right is attached to each share of Graphic common stock under a rights plan under which Coors Family Stockholders, the CDR Fund and EXOR are excluded from the definition of acquiring persons. | • After the closing, it is anticipated that one stockholder right will be attached to each share of New Graphic common stock under a rights plan, as described above, under which TPG Entities and Coors Family Stockholders are excluded from the definition of acquiring persons. | ||
Policy on Corporate Indebtedness | • Graphic’s board of directors is required to authorize all loans contracted on behalf of Graphic. | • New Graphic will not have a policy in its by-laws on corporate indebtedness. |
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• | Graphic’s Annual Report onForm 10-K for the fiscal year ended December 31, 2006 filed on March 2, 2007; | |
• | Graphic’s Proxy Statement for its 2007 Annual Meeting of Stockholders dated April 17, 2007; | |
• | Graphic’s Quarterly Reports onForm 10-Q for the quarters ended March 31, 2007 filed on May 3, 2007, June 30, 2007 filed on August 7, 2007 and September 30, 2007 filed on November 9, 2007; and |
• | Graphic’s Current Reports onForm 8-K filed with the SEC on January 3, 2007; March 29, 2007; May 21, 2007; July 11, 2007; August 23, 2007; October 17, 2007, as amended October 26, 2007 (disclosing the sale of Graphic’s operations in Sweden); November 27, 2007; and December 5, 2007. |
814 Livingston Court
Marietta, Georgia 30067
(770) 644-3000
Attention: Investor Relations Department
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F-2
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December 31, | ||||||||
Successor | Predecessor | |||||||
2006 | 2005 | |||||||
In millions | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and Equivalents | $ | 99.2 | $ | — | ||||
Receivables, Net | 185.8 | 18.8 | ||||||
Inventories | 231.3 | 152.8 | ||||||
Other Current Assets | 10.7 | 3.4 | ||||||
Total Current Assets | 527.0 | 175.0 | ||||||
Property, Plant and Equipment, Net | 621.6 | 358.7 | ||||||
Goodwill | 358.9 | 279.0 | ||||||
Intangible Assets, Net | 134.3 | 1.9 | ||||||
Deferred Debt Issue Costs | 22.5 | — | ||||||
Other Assets | 6.9 | 7.2 | ||||||
Total Assets | $ | 1,671.2 | $ | 821.8 | ||||
LIABILITIES | ||||||||
Current Liabilities: | ||||||||
Short-Term Debt | $ | 10.5 | $ | 0.8 | ||||
Accounts Payable | 145.2 | 79.3 | ||||||
Accrued Liabilities | 70.1 | 55.1 | ||||||
Restructuring | 6.9 | — | ||||||
Deferred Income Taxes | — | 11.7 | ||||||
Total Current Liabilities | 232.7 | 146.9 | ||||||
Long-Term Debt | 1,152.8 | 16.1 | ||||||
Deferred Tax Liabilities | 0.2 | 80.9 | ||||||
Accrued Pension and Postretirement Benefits | 35.8 | — | ||||||
Other Noncurrent Liabilities | 5.2 | 1.3 | ||||||
Total Liabilities | 1,426.7 | 245.2 | ||||||
EQUITY | ||||||||
Smurfit-Stone Container Enterprises, Inc. Investment | — | 576.6 | ||||||
Contributed Capital | 305.0 | — | ||||||
Accumulated Deficit | (53.5 | ) | — | |||||
Accumulated Other Comprehensive Loss | (7.0 | ) | — | |||||
Total Equity | 244.5 | 576.6 | ||||||
Total Liabilities and Equity | $ | 1,671.2 | $ | 821.8 | ||||
F-3
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Successor | Predecessor | |||||||||||||||||
July 1, 2006 to | January 1, 2006 to | Year Ended December 31, | ||||||||||||||||
December 31, | June 30, | Predecessor | Predecessor | |||||||||||||||
2006 | 2006 | 2005 | 2004 | |||||||||||||||
In millions | ||||||||||||||||||
Net Sales | $ | 964.2 | $ | 789.4 | $ | 1,584.4 | $ | 1,541.2 | ||||||||||
Cost of Sales | 881.3 | 699.0 | 1,381.1 | 1,338.2 | ||||||||||||||
Selling, General and Administrative | 89.7 | 75.4 | 141.0 | 137.9 | ||||||||||||||
Litigation Charge | — | — | 4.0 | — | ||||||||||||||
Restructuring | — | — | 5.0 | 1.9 | ||||||||||||||
(Gain) Loss on Sale of Assets | — | (0.1 | ) | (0.1 | ) | 0.1 | ||||||||||||
Income (Loss) from Operations | (6.8 | ) | 15.1 | 53.4 | 63.1 | |||||||||||||
Interest Income | 2.7 | — | — | — | ||||||||||||||
Interest Expense | (48.5 | ) | (0.6 | ) | (1.2 | ) | (0.9 | ) | ||||||||||
Other (Expense) Income, Net | (0.4 | ) | — | 0.1 | 0.2 | |||||||||||||
Income (Loss) before Income Taxes | (53.0 | ) | 14.5 | 52.3 | 62.4 | |||||||||||||
Income Tax Expense | (0.5 | ) | (5.8 | ) | (20.9 | ) | (24.8 | ) | ||||||||||
Net (Loss) Income | $ | (53.5 | ) | $ | 8.7 | $ | 31.4 | $ | 37.6 | |||||||||
F-4
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Successor | Predecessor | ||||||||||||||||
July 1, 2006 to | January 1, 2006 to | Year Ended December 31, | |||||||||||||||
December 31, | June 30, | Predecessor | Predecessor | ||||||||||||||
2006 | 2006 | 2005 | 2004 | ||||||||||||||
In millions | |||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||
Net (Loss) Income | $ | (53.5 | ) | $ | 8.7 | $ | 31.4 | $ | 37.6 | ||||||||
Noncash Items Included in Net (Loss) Income: | |||||||||||||||||
Depreciation and Amortization | 42.5 | 20.4 | 40.4 | 39.5 | |||||||||||||
Deferred Income Taxes | (0.2 | ) | (10.7 | ) | (11.1 | ) | 5.1 | ||||||||||
Amortization of Deferred Debt Issuance Costs | 1.8 | — | — | — | |||||||||||||
Asset Retirements Gain | — | (0.1 | ) | (0.1 | ) | — | |||||||||||
Non-cash Restructuring Charges | — | — | 2.5 | �� | (1.1 | ) | |||||||||||
Changes in Operating Assets & Liabilities: | |||||||||||||||||
Accounts Receivable, Net | (143.5 | ) | 3.6 | 3.1 | (7.3 | ) | |||||||||||
Inventories | 59.5 | (8.4 | ) | 14.1 | (6.8 | ) | |||||||||||
Prepaid Expenses and Other Current Assets | 0.8 | (2.2 | ) | (0.4 | ) | (1.9 | ) | ||||||||||
Accounts Payable and Accrued Liabilities | 50.7 | (12.9 | ) | 1.6 | 7.8 | ||||||||||||
Other, Net | 0.8 | 0.1 | 1.1 | (4.7 | ) | ||||||||||||
Net Cash (Used in) Provided by Operating Activities | (41.1 | ) | (1.5 | ) | 82.6 | 68.2 | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||
Capital Spending | (21.4 | ) | (39.0 | ) | (37.9 | ) | (31.5 | ) | |||||||||
Acquisitions, Net of Cash Received | (1,281.4 | ) | — | (1.5 | ) | — | |||||||||||
Proceeds from Disposal of Property/Other | 0.3 | 0.3 | 0.5 | 6.0 | |||||||||||||
Net Cash Used in Investing Activities | (1,302.5 | ) | (38.7 | ) | (38.9 | ) | (25.5 | ) | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||
Net (Repayments) Borrowings of Long-term Debt | (2.8 | ) | 0.1 | (2.1 | ) | (0.7 | ) | ||||||||||
Proceeds from Debt | 1,165.0 | — | 1.0 | 4.7 | |||||||||||||
Cash Contribution from Parent | 305.0 | — | — | — | |||||||||||||
Deferred Debt Issuance Costs | (24.4 | ) | — | — | (0.2 | ) | |||||||||||
Net Advances from (to) SSCE | — | 40.1 | (42.6 | ) | (46.5 | ) | |||||||||||
Net Cash Provided by (Used in) Financing Activities | 1,442.8 | 40.2 | (43.7 | ) | (42.7 | ) | |||||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | — | — | — | — | |||||||||||||
Net Increase in Cash and Equivalents | 99.2 | — | — | — | |||||||||||||
Cash and Equivalents at Beginning of Period | — | — | — | — | |||||||||||||
CASH AND EQUIVALENTS AT END OF PERIOD | $ | 99.2 | $ | — | $ | — | $ | — | |||||||||
F-5
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Accumulated | ||||||||||||||||||||
Other | ||||||||||||||||||||
SSCE | Contributed | Accumulated | Comprehensive | |||||||||||||||||
Investment | Capital | Deficit | Income (Loss) | Total | ||||||||||||||||
In millions | ||||||||||||||||||||
Predecessor Balances at December 31, 2003 | $ | 596.7 | $ | — | $ | — | $ | — | $ | 596.7 | ||||||||||
Net Income | 37.6 | — | — | — | 37.6 | |||||||||||||||
Net Advances to SSCE | (46.5 | ) | — | — | — | (46.5 | ) | |||||||||||||
Balances at December 31, 2004 | 587.8 | — | — | — | 587.8 | |||||||||||||||
Net Income | 31.4 | — | — | — | 31.4 | |||||||||||||||
Net Advances to SSCE | (42.6 | ) | — | — | — | (42.6 | ) | |||||||||||||
Balances at December 31, 2005 | 576.6 | — | — | — | 576.6 | |||||||||||||||
Net Income | 8.7 | — | — | — | 8.7 | |||||||||||||||
Net Advances from SSCE | 29.8 | — | — | — | 29.8 | |||||||||||||||
Balances at June 30, 2006 | $ | 615.1 | $ | — | $ | — | $ | — | $ | 615.1 | ||||||||||
Successor | ||||||||||||||||||||
Balances at July 1, 2006 | ||||||||||||||||||||
Capital Contribution | $ | — | $ | 305.0 | $ | — | $ | — | $ | 305.0 | ||||||||||
Net Loss | — | — | (53.5 | ) | — | (53.5 | ) | |||||||||||||
Net Loss on Derivative Instruments | — | — | — | (2.1 | ) | (2.1 | ) | |||||||||||||
Comprehensive Loss | — | — | — | — | (55.6 | ) | ||||||||||||||
Adjustment to Initially Apply FASB Statement 158 | — | — | — | (4.9 | ) | (4.9 | ) | |||||||||||||
Balances at December 31, 2006 | $ | — | $ | 305.0 | $ | (53.5 | ) | $ | (7.0 | ) | $ | 244.5 | ||||||||
F-6
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1. | Organization and Description of Business |
2. | Basis of Presentation |
F-7
Table of Contents
As of | ||||
June 30, | ||||
2006 | ||||
In millions | ||||
Current assets: | ||||
Cash | $ | — | ||
Trade accounts receivable | 7.2 | |||
Inventories | 233.7 | |||
Prepaid expenses and other current assets | 6.9 | |||
Total current assets | 247.8 | |||
Property, plant and equipment | 518.7 | |||
Goodwill | 245.0 | |||
Intangibles | 74.4 | |||
Other non-current assets | 7.5 | |||
Total assets acquired | 1,093.4 | |||
Current liabilities: | ||||
Accounts payable | 82.0 | |||
Accrued liabilities | 18.5 | |||
Other current liabilities | 22.8 | |||
Other non-current liabilities | 23.9 | |||
Total liabilities assumed | 147.2 | |||
Net assets acquired | $ | 946.2 | ||
F-8
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As of | ||||
August 16, | ||||
2006 | ||||
In millions | ||||
Current assets: | ||||
Cash | $ | 0.1 | ||
Trade accounts receivable | 35.0 | |||
Inventories | 57.1 | |||
Prepaid expenses and other current assets | 4.6 | |||
Total current assets | 96.8 | |||
Property, plant and equipment | 119.5 | |||
Goodwill | 113.9 | |||
Intangibles | 64.7 | |||
Other non-current assets | 0.3 | |||
Total assets acquired | 395.2 | |||
Current liabilities: | ||||
Accounts payable | 37.3 | |||
Accrued liabilities | 4.2 | |||
Other current liabilities | 7.7 | |||
Deferred income taxes | 0.3 | |||
Other non-current liabilities | 10.4 | |||
Total liabilities assumed | 59.9 | |||
Net assets acquired | $ | 335.3 | ||
F-9
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3. | Summary of Significant Accounting Policies |
F-10
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Buildings and improvements | 10 to 40 | |||
Machinery and equipment | 7 to 20 | |||
Transportation equipment | 5 to 7 | |||
Furniture and fixtures | 5 to 7 |
F-11
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F-12
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4. | Strategic Initiatives and Restructuring Activities |
Property, | Severance | Facility | ||||||||||||||||||||||
Plant and | and | Lease | Closure | |||||||||||||||||||||
Equipment | Benefits | Commitments | Costs | Other | Total | |||||||||||||||||||
In millions | ||||||||||||||||||||||||
Predecessor | ||||||||||||||||||||||||
Balance at December 31, 2003 | $ | — | $ | 1.4 | $ | — | $ | — | $ | 0.2 | $ | 1.6 | ||||||||||||
Provision | (1.1 | ) | 2.1 | 0.1 | 0.3 | 0.5 | 1.9 | |||||||||||||||||
Payments | — | (2.8 | ) | (0.1 | ) | (0.3 | ) | (0.7 | ) | (3.9 | ) | |||||||||||||
Non-Cash Reduction | (4.9 | ) | — | — | — | — | (4.9 | ) | ||||||||||||||||
Sale of Assets | 6.0 | — | — | — | — | 6.0 | ||||||||||||||||||
Balance at December 31, 2004 | — | 0.7 | — | — | — | 0.7 | ||||||||||||||||||
Provision | 2.5 | 1.4 | 0.1 | 0.7 | 0.3 | 5.0 | ||||||||||||||||||
Payments | — | (1.3 | ) | (0.1 | ) | (0.6 | ) | (0.3 | ) | (2.3 | ) | |||||||||||||
Non-Cash Reduction | (2.5 | ) | — | — | — | — | (2.5 | ) | ||||||||||||||||
F-13
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Property, | Severance | Facility | ||||||||||||||||||||||
Plant and | and | Lease | Closure | |||||||||||||||||||||
Equipment | Benefits | Commitments | Costs | Other | Total | |||||||||||||||||||
In millions | ||||||||||||||||||||||||
Balance at December 31, 2005 | — | 0.8 | — | 0.1 | — | 0.9 | ||||||||||||||||||
Payments | — | (0.8 | ) | — | (0.1 | ) | — | (0.9 | ) | |||||||||||||||
Balance at June 30, 2006 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Successor | ||||||||||||||||||||||||
Balance at July 1, 2006 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Provision | — | 6.8 | — | 1.7 | — | 8.5 | ||||||||||||||||||
Payments | — | (1.2 | ) | — | (0.1 | ) | — | (1.3 | ) | |||||||||||||||
Non-Cash Reduction | — | — | — | (0.3 | ) | — | (0.3 | ) | ||||||||||||||||
Balance at December 31, 2006 | $ | — | $ | 5.6 | $ | — | $ | 1.3 | $ | — | $ | 6.9 | ||||||||||||
5. | Inventories |
December 31, | ||||||||
Successor | Predecessor | |||||||
2006 | 2005 | |||||||
In millions | ||||||||
Raw Materials and Supplies | $ | 68.7 | $ | 56.0 | ||||
Work in Progress | 27.6 | 18.8 | ||||||
Finished Products | 135.0 | 78.0 | ||||||
Total Inventories | $ | 231.3 | $ | 152.8 | ||||
6. | Property, Plant and Equipment |
Successor | Predecessor | |||||||
2006 | 2005 | |||||||
In millions | ||||||||
Land and Land Improvements | $ | 83.3 | $ | 18.0 | ||||
Buildings and Leasehold Improvements | 142.6 | 103.4 | ||||||
Machinery, Fixtures and Equipment | 381.5 | 646.1 | ||||||
Construction in Progress | 53.7 | 33.0 | ||||||
661.1 | 800.5 | |||||||
Less Accumulated Depreciation | (39.5 | ) | (441.8 | ) | ||||
Net Property, Plant and Equipment | $ | 621.6 | $ | 358.7 | ||||
F-14
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7. | Goodwill |
8. | Other Intangible Assets |
Successor December 31, 2006 | ||||||||||||||||
Weighted | Gross | Accumulated | Net | |||||||||||||
Average Life | Intangibles | Amortization | Intangibles | |||||||||||||
In millions | ||||||||||||||||
Customer Relationships | 15 | $ | 126.2 | $ | (4.0 | ) | $ | 122.2 | ||||||||
Patents | 5 | 3.6 | (0.3 | ) | 3.3 | |||||||||||
Trademarks | 5 | 3.7 | (0.4 | ) | 3.3 | |||||||||||
Other | 7 | 5.6 | (0.1 | ) | 5.5 | |||||||||||
Balance at December 31, 2006 | $ | 139.1 | $ | (4.8 | ) | $ | 134.3 | |||||||||
F-15
Table of Contents
9. | Long-Term Debt |
December 31, | ||||||||
Successor | Predecessor | |||||||
2006 | 2005 | |||||||
In millions | ||||||||
First-Lien Term Loan | $ | 822.9 | $ | — | ||||
Second-Lien Term Loan | 330.0 | — | ||||||
Revolving Credit Facility | 10.0 | — | ||||||
Industrial Revenue Bond | — | 10.0 | ||||||
Other Debt | — | 4.9 | ||||||
Obligations Under Capitalized Leases | 0.4 | 2.0 | ||||||
Total Debt | 1,163.3 | 16.9 | ||||||
Less: Current Portion of Long-Term Debt | (10.5 | ) | (0.8 | ) | ||||
Total Long-Term Debt | $ | 1,152.8 | $ | 16.1 | ||||
In millions | ||||
2007 | $ | 10.5 | ||
2008 | 8.4 | |||
2009 | 8.3 | |||
2010 | 8.3 | |||
2011 | 6.2 | |||
Thereafter | 1,121.6 | |||
$ | 1,163.3 | |||
F-16
Table of Contents
10. | Financial Instruments |
F-17
Table of Contents
11. | Leases |
In millions | ||||
2007 | $ | 28.7 | ||
2008 | 22.2 | |||
2009 | 18.5 | |||
2010 | 14.5 | |||
2011 | 10.6 | |||
Thereafter | 25.3 | |||
Total Minimum Lease payments | $ | 119.8 | ||
F-18
Table of Contents
12. | Income Taxes |
December 31, | ||||||||
Successor | Predecessor | |||||||
2006 | 2005 | |||||||
In millions | ||||||||
Deferred tax liabilities: | ||||||||
Inventory | $ | (0.2 | ) | $ | (18.8 | ) | ||
Property, plant and equipment | — | (80.1 | ) | |||||
Employee benefits | — | (0.5 | ) | |||||
Other | (0.1 | ) | (0.5 | ) | ||||
Total deferred tax liabilities | (0.3 | ) | (99.9 | ) | ||||
Deferred tax assets: | ||||||||
Accrued liabilities | — | 6.9 | ||||||
Net operating loss | 0.8 | — | ||||||
Restructuring | — | 0.3 | ||||||
Other | 0.4 | 0.1 | ||||||
Total deferred tax assets | 1.2 | 7.3 | ||||||
Valuation allowance for deferred tax assets | (1.1 | ) | — | |||||
Net deferred tax assets | 0.1 | 7.3 | ||||||
Net deferred tax liabilities | $ | (0.2 | ) | $ | (92.6 | ) | ||
F-19
Table of Contents
Successor | Predecessor | ||||||||||||||||
July 1, 2006 | January 1, 2006 | Year | Year | ||||||||||||||
through | through | Ended | Ended | ||||||||||||||
December 31, | June 30, | December 31, | December 31, | ||||||||||||||
2006 | 2006 | 2005 | 2004 | ||||||||||||||
In millions | |||||||||||||||||
Current: | |||||||||||||||||
Federal | $ | — | $ | 14.3 | $ | 26.6 | $ | 16.5 | |||||||||
State and local | 0.1 | 2.2 | 5.3 | 3.3 | |||||||||||||
Foreign | 0.5 | — | — | — | |||||||||||||
Total current expense | 0.6 | 16.5 | 31.9 | 19.8 | |||||||||||||
Deferred: | |||||||||||||||||
Federal | — | (9.4 | ) | (9.2 | ) | 4.2 | |||||||||||
State and local | (0.1 | ) | (1.3 | ) | (1.8 | ) | 0.8 | ||||||||||
Foreign | — | — | — | — | |||||||||||||
Total deferred benefit | (0.1 | ) | (10.7 | ) | (11.0 | ) | 5.0 | ||||||||||
Total income tax expense | $ | 0.5 | $ | 5.8 | $ | 20.9 | $ | 24.8 | |||||||||
13. | Employee Benefit Plans |
F-20
Table of Contents
U.S. | Canadian | |||||||
Plans | Plans | |||||||
Cash Equivalents | 7% | 13% | ||||||
Debt Securities | 20% | 32% | ||||||
Equity Securities | 61% | 55% | ||||||
Alternative Asset Classes | 12% | — | ||||||
Total | 100% | 100% | ||||||
Equity Securities | 30 to 95% | |||
Cash | 0 to 60% | |||
Debt Securities | 0 to 28% | |||
Alternative Asset Classes | 0 to 35% |
F-21
Table of Contents
Defined Benefit | Postretirement | |||||||
Plans | Plans | |||||||
In millions | ||||||||
Change in benefit obligation: | ||||||||
Benefit Obligation at July 1 | $ | 21.5 | $ | 12.1 | ||||
Benefit Obligation from Field acquisition | 17.0 | — | ||||||
Service Cost | 2.9 | 0.2 | ||||||
Interest Cost | 1.1 | 0.4 | ||||||
Actuarial Loss | 4.5 | 1.2 | ||||||
Plan Participants Contributions | 0.1 | — | ||||||
Benefits Paid | (0.7 | ) | — | |||||
Benefits Obligation at December 31 | $ | 46.4 | $ | 13.9 | ||||
Change in plan assets: | ||||||||
Fair Value of Plan Assets at July 1 | $ | 21.7 | $ | — | ||||
Actual Return on Plan Assets | 1.6 | — | ||||||
Employer Contributions | 1.8 | — | ||||||
Plan Participants’ Contributions | 0.1 | — | ||||||
Benefits Paid | (0.7 | ) | — | |||||
Foreign Currency Rate Changes | — | — | ||||||
Fair Value of Plan Assets at December 31 | 24.5 | — | ||||||
Underfunded Status | $ | (21.9 | ) | $ | (13.9 | ) | ||
Amounts recognized in the balance sheets: | ||||||||
Accrued Benefit Liability | $ | (21.9 | ) | $ | (13.9 | ) | ||
Accumulated Other Comprehensive Loss | 3.7 | 1.2 | ||||||
Net Amount Recognized | $ | (18.2 | ) | $ | (12.7 | ) | ||
Defined Benefit | Postretirement | |||||||
Plans | Plans | |||||||
In millions | ||||||||
Service Cost | $ | 2.9 | $ | 0.2 | ||||
Interest Cost | 1.1 | 0.4 | ||||||
Expected Return on Plan Assets | (0.7 | ) | — | |||||
Provision for Administrative Expense | — | — | ||||||
Net Periodic Benefit Cost | $ | 3.3 | $ | 0.6 | ||||
F-22
Table of Contents
Defined Benefit | Postretirement | |||||||
Plans | Plans | |||||||
U.S. Plans | ||||||||
Discount Rate | 5.75 | % | 5.75 | % | ||||
Rate of Compensation Increase | 4.00 | % | 4.00 | % | ||||
Foreign Plans | ||||||||
Discount Rate | 5.00 | % | 5.00 | % | ||||
Rate of Compensation Increase | 2.50 — 3.95 | % | 2.50 — 3.95 | % |
Defined Benefit | Postretirement | |||||||
Plans | Plans | |||||||
U.S. Plans | ||||||||
Discount Rate | 6.00 — 6.25 | % | 6.25 | % | ||||
Expected Long-Term Return or Plan Assets | 8.00 — 8.50 | % | 8.00 | % | ||||
Rate of Compensation Increase | 4.00 | % | 4.00 | % | ||||
Foreign Plans | ||||||||
Discount Rate | 5.00 | % | 5.00 | % | ||||
Expected Long-Term Return or Plan Assets | 7.00 | % | 7.00 | % | ||||
Rate of Compensation Increase | 2.50 — 3.95 | % | 2.50 — 3.95 | % |
Defined Benefit | Postretirement | |||||||
Plans | Plans | |||||||
In millions | ||||||||
2007 | $ | 1.7 | $ | 0.4 | ||||
2008 | 2.0 | 0.6 | ||||||
2009 | 2.2 | 0.8 | ||||||
2010 | 2.4 | 0.9 | ||||||
2011 | 2.6 | 1.0 | ||||||
Thereafter | 16.8 | 5.6 |
F-23
Table of Contents
14. | Accumulated Other Comprehensive (Loss) |
December 31, | ||||||||||||
Successor | Predecessor | Predecessor | ||||||||||
2006 | 2005 | 2004 | ||||||||||
In millions | ||||||||||||
Net Loss on Derivative Instruments | $ | (2.1 | ) | $ | — | $ | — | |||||
Pension and Postretirement | (4.9 | ) | — | — | ||||||||
Foreign Currency Translation Adjustments | — | — | — | |||||||||
Accumulated Other Comprehensive Loss | $ | (7.0 | ) | $ | — | $ | — | |||||
15. | Related Party Transactions |
F-24
Table of Contents
Six Months | ||||||||||||
Ended | Year Ended | |||||||||||
June 30, | December 31, | |||||||||||
2006 | 2005 | 2004 | ||||||||||
In millions | ||||||||||||
Product sales to SSCE | $ | 2.5 | $ | 3.5 | $ | 4.7 | ||||||
Product purchases from SSCE | 108.2 | 199.9 | 201.1 | |||||||||
Common costs allocated to BCH for: | ||||||||||||
Employee benefits | ||||||||||||
Medical | 20.7 | 41.9 | 41.2 | |||||||||
Pension | 10.8 | 17.9 | 17.2 | |||||||||
401(k) matching distributions | 2.2 | 3.6 | 3.5 | |||||||||
Postretirement medical | 1.5 | 3.7 | 5.1 | |||||||||
Worker’s compensation | 2.0 | 4.0 | 3.8 | |||||||||
Property insurance | 0.8 | 2.1 | 1.9 | |||||||||
Natural gas hedging realized losses (gains) | 0.4 | (3.9 | ) | (0.5 | ) | |||||||
Stock compensation cost | 2.4 | 2.6 | 1.5 |
F-25
Table of Contents
16. | Contingencies and Other Matters |
17. | Business Segment Information |
F-26
Table of Contents
Folding | Flexible | Corporate | ||||||||||||||||||
Carton | Multi-wall | Packaging/ | and | |||||||||||||||||
and Paperboard | Bag | Label | Other | Total | ||||||||||||||||
In millions | ||||||||||||||||||||
Successor | ||||||||||||||||||||
Six months ended December 31, 2006 | ||||||||||||||||||||
Revenues from External Customers | $ | 607.0 | $ | 238.8 | $ | 107.0 | $ | 11.4 | $ | 964.2 | ||||||||||
Intersegment Revenues | — | — | 9.9 | 4.4 | 14.3 | |||||||||||||||
Depreciation and Amortization | 25.9 | 5.7 | 3.6 | 7.3 | 42.5 | |||||||||||||||
Interest Expense, net | 4.1 | 3.1 | 1.3 | 37.3 | 45.8 | |||||||||||||||
Segment Profit | 39.8 | 21.4 | 2.8 | (117.0 | ) | (53.0 | ) | |||||||||||||
Expenditures for Long-Lived Assets | 5.0 | 11.8 | 4.3 | 0.3 | 21.4 | |||||||||||||||
Predecessor | ||||||||||||||||||||
Six months ended June 30, 2006 | ||||||||||||||||||||
Revenues from External Customers | $ | 443.4 | $ | 233.4 | $ | 112.6 | $ | — | $ | 789.4 | ||||||||||
Intersegment Revenues | — | — | 10.8 | — | 10.8 | |||||||||||||||
Depreciation and Amortization | 13.8 | 4.1 | 2.5 | — | 20.4 | |||||||||||||||
Interest Expense, net | 0.5 | 0.1 | — | — | 0.6 | |||||||||||||||
Segment Profit | 4.1 | 6.6 | 3.8 | — | 14.5 | |||||||||||||||
Expenditures for Long-Lived Assets | 21.6 | 8.9 | 8.5 | — | 39.0 | |||||||||||||||
Predecessor | ||||||||||||||||||||
Year ended December 31, 2005 | ||||||||||||||||||||
Revenues from External Customers | $ | 903.1 | $ | 469.3 | $ | 212.0 | $ | — | $ | 1,584.4 | ||||||||||
Intersegment Revenues | — | — | 17.1 | — | 17.1 | |||||||||||||||
Depreciation and Amortization | 27.9 | 8.7 | 3.8 | — | 40.4 | |||||||||||||||
Restructuring Expense | 4.8 | 0.2 | — | — | 5.0 | |||||||||||||||
Interest Expense, net | 0.9 | 0.3 | — | — | 1.2 | |||||||||||||||
Segment Profit | 22.4 | 18.1 | 11.8 | — | 52.3 | |||||||||||||||
Expenditures for Long-Lived Assets | 15.0 | 12.7 | 10.2 | — | 37.9 |
F-27
Table of Contents
Folding | Flexible | Corporate | ||||||||||||||||||
Carton | Multi-wall | Packaging/ | and | |||||||||||||||||
and Paperboard | Bag | Label | Other | Total | ||||||||||||||||
In millions | ||||||||||||||||||||
Predecessor | ||||||||||||||||||||
Year ended December 31, 2004 | ||||||||||||||||||||
Revenues from External Customers | $ | 868.0 | $ | 478.5 | $ | 194.7 | $ | — | $ | 1,541.2 | ||||||||||
Intersegment Revenues | 0.1 | — | 19.3 | — | 19.4 | |||||||||||||||
Depreciation and Amortization | 27.6 | 7.2 | 4.7 | — | 39.5 | |||||||||||||||
Restructuring Expense | 1.1 | 0.8 | — | — | 1.9 | |||||||||||||||
Interest Expense, net | 0.8 | 0.1 | — | — | 0.9 | |||||||||||||||
Segment Profit | 26.9 | 21.5 | 14.0 | — | 62.4 | |||||||||||||||
Expenditures for Long-Lived Assets | 15.1 | 11.5 | 4.9 | — | 31.5 |
Successor | Predecessor | ||||||||||||||||
July 1, | January 1, | ||||||||||||||||
2006 | 2006 | Year | |||||||||||||||
through | through | Ended | |||||||||||||||
December 31, | June 30, | December 31, | |||||||||||||||
2006 | 2006 | 2005 | 2004 | ||||||||||||||
In millions | |||||||||||||||||
United States | $ | 924.8 | $ | 756.3 | $ | 1,527.9 | $ | 1,493.1 | |||||||||
Foreign | 39.4 | 33.1 | 56.5 | 48.1 | |||||||||||||
Total Net Sales | $ | 964.2 | $ | 789.4 | $ | 1,584.4 | $ | 1,541.2 | |||||||||
18. | Equity Compensation Plan |
19. | Merger and Integration Cost Impact on Operations |
F-28
Table of Contents
Successor | ||||||||
As of September 30, | As of December 31, | |||||||
2007 | 2006 | |||||||
(Unaudited) | ||||||||
In millions | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and Equivalents | $ | 85.9 | $ | 99.2 | ||||
Receivables, Net | 207.1 | 185.8 | ||||||
Inventories | 229.8 | 231.3 | ||||||
Other Current Assets | 13.6 | 10.7 | ||||||
Total Current Assets | 536.4 | 527.0 | ||||||
Property, Plant and Equipment, Net | 620.6 | 621.6 | ||||||
Goodwill | 370.7 | 358.9 | ||||||
Intangible Assets, Net | 127.0 | 134.3 | ||||||
Deferred Debt Issue Costs | 20.0 | 22.5 | ||||||
Other Assets | 5.1 | 6.9 | ||||||
Total Assets | $ | 1,679.8 | $ | 1,671.2 | ||||
LIABILITIES | ||||||||
Current Liabilities: | ||||||||
Short-Term Debt | $ | 10.5 | $ | 10.5 | ||||
Accounts Payable | 154.0 | 145.2 | ||||||
Accrued Liabilities | 69.4 | 70.1 | ||||||
Restructuring | 17.3 | 6.9 | ||||||
Deferred Income Taxes | — | — | ||||||
Total Current Liabilities | 251.2 | 232.7 | ||||||
Long-Term Debt | 1,146.5 | 1,152.8 | ||||||
Deferred Tax Liabilities | 0.2 | 0.2 | ||||||
Accrued Pension and Postretirement Benefits | 41.8 | 35.8 | ||||||
Other Noncurrent Liabilities | 7.6 | 5.2 | ||||||
Total Liabilities | 1,447.3 | 1,426.7 | ||||||
EQUITY | ||||||||
Smurfit-Stone Container Enterprises, Inc. Investment | — | — | ||||||
Contributed Capital | 305.0 | 305.0 | ||||||
Accumulated Deficit | (61.4 | ) | (53.5 | ) | ||||
Accumulated Other Comprehensive Loss | (11.1 | ) | (7.0 | ) | ||||
Total Equity | 232.5 | 244.5 | ||||||
Total Liabilities and Equity | $ | 1,679.8 | $ | 1,671.2 | ||||
F-29
Table of Contents
Successor | Successor | Successor | Successor | Predecessor | ||||||||||||||||
Three Months | Three Months | Nine Months | Three Months | Six Months | ||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||
September 30, | September 30, | September 30, | September 30, | June 30, | ||||||||||||||||
2007 | 2006 | 2007 | 2006 | 2006 | ||||||||||||||||
Net Sales | $ | 527.4 | $ | 463.0 | $ | 1,527.7 | $ | 463.0 | $ | 789.4 | ||||||||||
Cost of Sales | 451.6 | 416.0 | 1,321.8 | 416.0 | 699.0 | |||||||||||||||
Selling, General and Administrative | 44.6 | 37.0 | 141.5 | 37.0 | 75.4 | |||||||||||||||
Gain on Sale of Assets | (0.4 | ) | — | (0.1 | ) | — | (0.1 | ) | ||||||||||||
Gain on Insurance Claim | — | — | (1.3 | ) | — | — | ||||||||||||||
Income from Operations | 31.6 | 10.0 | 65.8 | 10.0 | 15.1 | |||||||||||||||
Interest Income | 1.1 | 1.4 | 3.5 | 1.4 | — | |||||||||||||||
Interest Expense | (25.2 | ) | (23.4 | ) | (75.1 | ) | (23.4 | ) | (0.6 | ) | ||||||||||
Other (Expense) Income, Net | (0.4 | ) | 1.0 | (0.5 | ) | 1.0 | — | |||||||||||||
Income (Loss) before Income Taxes | 7.1 | (11.0 | ) | (6.3 | ) | (11.0 | ) | 14.5 | ||||||||||||
Income Tax Expense | (0.5 | ) | (0.3 | ) | (1.6 | ) | (0.3 | ) | (5.8 | ) | ||||||||||
Net (Loss) Income | $ | 6.6 | $ | (11.3 | ) | $ | (7.9 | ) | $ | (11.3 | ) | $ | 8.7 | |||||||
F-30
Table of Contents
Successor | Successor | Predecessor | ||||||||||
Nine Months Ended | Three Months Ended | Six Months Ended | ||||||||||
September 30, | September 30, | June 30, | ||||||||||
2007 | 2006 | 2006 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net (Loss) Income | $ | (7.9 | ) | $ | (11.3 | ) | $ | 8.7 | ||||
Noncash Items Included in Net (Loss) Income: | ||||||||||||
Depreciation and Amortization | 67.7 | 17.7 | 20.4 | |||||||||
Deferred Income Taxes | — | — | (10.7 | ) | ||||||||
Amortization of Deferred Debt Issuance Costs | 2.5 | 1.1 | — | |||||||||
Asset Retirements Loss (Gain) | (0.1 | ) | — | (0.1 | ) | |||||||
Changes in Operating Assets and Liabilities: | ||||||||||||
Accounts Receivable, Net | (18.2 | ) | (168.1 | ) | 3.6 | |||||||
Inventories | 0.4 | 7.3 | (8.4 | ) | ||||||||
Prepaid Expenses and Other Current Assets | (2.8 | ) | (1.9 | ) | (2.2 | ) | ||||||
Accounts Payable and Accrued Liabilities | 9.0 | 78.5 | (12.9 | ) | ||||||||
Other, Net | (0.9 | ) | (2.6 | ) | 0.1 | |||||||
Net Cash Provided By (Used For) Operating Activities | 49.7 | (79.3 | ) | (1.5 | ) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Capital Expenditures | (53.8 | ) | (8.9 | ) | (39.0 | ) | ||||||
Acquisition Related Payments | (6.3 | ) | (333.1 | ) | — | |||||||
Proceeds from Disposal of Property/Other | 3.4 | — | 0.3 | |||||||||
Net Cash Used in Investing Activities | (56.7 | ) | (342.0 | ) | (38.7 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Net (Repayments) Borrowings of Long-term Debt | (6.3 | ) | 269.5 | 0.1 | ||||||||
Capital Contribution From Parent | 9.2 | 65.0 | — | |||||||||
Distribution to Parent | (9.2 | ) | — | — | ||||||||
Net Advances from SSCE | — | — | 40.1 | |||||||||
Deferred Debt Issuance Costs | — | (0.4 | ) | — | ||||||||
Net Cash (Used For) Provided by Financing Activities | (6.3 | ) | 334.1 | 40.2 | ||||||||
Decrease in Cash and Cash Equivalents | (13.3 | ) | (87.2 | ) | — | |||||||
Cash and Cash Equivalents Beginning of Period | 99.2 | 164.5 | — | |||||||||
Cash and Cash Equivalents End of Period | $ | 85.9 | $ | 77.3 | — | |||||||
F-31
Table of Contents
1. | Organization |
2. | Basis of Presentation |
F-32
Table of Contents
3. | Accounting Policies |
4. | Inventories |
September 30, | December 31, | |||||||
2007 | 2006 | |||||||
In millions | ||||||||
Raw Materials and Supplies | $ | 74.5 | $ | 68.7 | ||||
Work in Progress | 30.5 | 27.6 | ||||||
Finished Products | 124.8 | 135.0 | ||||||
Total Inventories | $ | 229.8 | $ | 231.3 | ||||
5. | Acquisition Activities |
F-33
Table of Contents
6. | Strategic Initiatives and Restructuring Activities |
Severance | Facility | |||||||||||
and | Closure | |||||||||||
Benefits | Costs | Total | ||||||||||
In millions | ||||||||||||
Balance at December 31, 2006 | $ | 5.6 | $ | 1.3 | $ | 6.9 | ||||||
Provision | 12.9 | 7.1 | 20.0 | |||||||||
Payments | (8.1 | ) | (1.5 | ) | (9.6 | ) | ||||||
Balance at September 30, 2007 | $ | 10.4 | $ | 6.9 | $ | 17.3 | ||||||
7. | Long-Term Debt |
September 30, | December 31, | |||||||
2007 | 2006 | |||||||
In millions | ||||||||
First-Lien Term Loan | $ | 816.8 | $ | 822.9 | ||||
Second-Lien Term Loan | 330.0 | 330.0 | ||||||
Revolving credit facility | 10.0 | 10.0 | ||||||
Obligations under capitalized leases | 0.2 | 0.4 | ||||||
Total debt | 1,157.0 | 1,163.3 | ||||||
Less: Current portion of long-term debt | (10.5 | ) | (10.5 | ) | ||||
Total long-term debt | $ | 1,146.5 | $ | 1,152.8 | ||||
F-34
Table of Contents
8. | Financial Instruments |
F-35
Table of Contents
8. | Financial Instruments — (Continued) |
9. | Income taxes |
10. | Employee Benefit Plans |
F-36
Table of Contents
10. | Employee Benefit Plans — (Continued) |
Defined Benefit Plans | Postretirement Plans | |||||||||||||||
Three Months | Nine Months | Three Months | Nine Months | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2007 | 2007 | 2007 | 2007 | |||||||||||||
In millions | ||||||||||||||||
Service cost | $ | 1.8 | $ | 5.3 | $ | 0.2 | $ | 0.4 | ||||||||
Interest cost | 0.7 | 2.1 | 0.2 | 0.6 | ||||||||||||
Expected return on plan assets | (0.5 | ) | (1.4 | ) | — | — | ||||||||||
Provision for administrative expense | — | — | — | — | ||||||||||||
Amortization of actuarial losses | — | — | — | — | �� | |||||||||||
Net periodic benefit cost | $ | 2.0 | $ | 6.0 | $ | 0.4 | $ | 1.0 | ||||||||
11. | Ownership and profits interest plans |
12. | Comprehensive Income (Loss) |
Nine Months | Three Months | Six Months | ||||||||||||||||||
Three Months Ended | Ended | Ended | Ended | |||||||||||||||||
September 30 | September 30 | September 30 | June 30 | |||||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | ||||||||||||||||
2007 | 2006 | 2007 | 2006 | 2006 | ||||||||||||||||
In millions | ||||||||||||||||||||
Net Income (Loss) | $ | 6.6 | $ | (11.3 | ) | $ | (7.9 | ) | $ | (11.3 | ) | $ | 8.7 | |||||||
Other Comprehensive Income (Loss): | ||||||||||||||||||||
Net Loss on Derivative Instruments | (7.8 | ) | — | (4.1 | ) | — | — | |||||||||||||
Comprehensive Income (Loss) | $ | (1.2 | ) | $ | (11.3 | ) | $ | (12.0 | ) | $ | (11.3 | ) | $ | 8.7 | ||||||
F-37
Table of Contents
13. | Contingencies and Other Matters |
14. | Business Segment Information |
Successor | Successor | Predecessor | ||||||||||
Nine Months | Three Months | Six Months | ||||||||||
Ended | Ended | Ended | ||||||||||
September 30, 2007 | September 30, 2006 | June 30, 2006 | ||||||||||
In millions | ||||||||||||
Net Sales: | ||||||||||||
Folding Carton and Coated Recycled Board | $ | 987.1 | $ | 284.0 | $ | 443.4 | ||||||
Multi-Wall Bag | 354.5 | 120.7 | 233.4 | |||||||||
Flexible Packaging/Label | 169.3 | 56.0 | 112.6 | |||||||||
Corporate/Other | 16.8 | 2.3 | — | |||||||||
Total | $ | 1,527.7 | $ | 463.0 | $ | 789.4 | ||||||
Income (Loss) From Operations: | ||||||||||||
Folding Carton and Coated Recycled Board | $ | 90.2 | $ | 21.3 | $ | 4.6 | ||||||
Multi-Wall Bag | 25.0 | 9.2 | 6.7 | |||||||||
Flexible Packaging/Label | 15.5 | 3.6 | 3.8 | |||||||||
Corporate/Other | (64.9 | ) | (24.1 | ) | — | |||||||
Total | $ | 65.8 | $ | 10.0 | $ | 15.1 | ||||||
F-38
Table of Contents
Successor | Successor | |||||||
Three Months | Three Months | |||||||
Ended | Ended | |||||||
September 30, 2007 | September 30, 2006 | |||||||
In millions | ||||||||
Net Sales: | ||||||||
Folding Carton and Coated Recycled Board | $ | 340.9 | $ | 284.0 | ||||
Multi-Wall Bag | 119.9 | 120.7 | ||||||
Flexible Packaging/Label | 60.7 | 56.0 | ||||||
Corporate/Other | 5.9 | 2.3 | ||||||
Total | $ | 527.4 | $ | 463.0 | ||||
Income (Loss) From Operations: | ||||||||
Folding Carton and Paperboard | $ | 34.7 | $ | 21.3 | ||||
Multi-Wall Bag | 7.8 | 9.2 | ||||||
Flexible Packaging/Label | 8.2 | 3.6 | ||||||
Corporate/Other | (19.1 | ) | (24.1 | ) | ||||
Total | $ | 31.6 | $ | 10.0 | ||||
15. | Subsequent Event |
F-39
Table of Contents
— | Transaction Agreement and Agreement and Plan of Merger | |||||
— | New Graphic Form of Amended and Restated Certificate of Incorporation | |||||
— | New Graphic Form of Amended and Restated Bylaws | |||||
— | Voting Agreement | |||||
— | Stockholders Agreement | |||||
— | Registration Rights Agreement | |||||
— | Opinion of Goldman, Sachs & Co. |
Table of Contents
and
AGREEMENT AND PLAN OF MERGER
dated as of July 9, 2007
by and among
GRAPHIC PACKAGING CORPORATION,
BLUEGRASS CONTAINER HOLDINGS, LLC,
TPG BLUEGRASS IV, L.P.,
TPG BLUEGRASS IV — AIV 2, L.P.,
TPG BLUEGRASS V, L.P.,
TPG BLUEGRASS V — AIV 2, L.P.,
FIELD HOLDINGS, INC.,
TPG FOF V-A, L.P.,
TPG FOF V-B, L.P.,
BCH MANAGEMENT, LLC,
NEW GIANT CORPORATION
and
GIANT MERGER SUB, INC.
Table of Contents
Page | ||||||
ARTICLE I THE MERGER AND EXCHANGE | A-1 | |||||
Section 1.1. | The Merger | A-1 | ||||
Section 1.2. | Effective Time of the Merger | A-2 | ||||
Section 1.3. | The Exchange | A-2 | ||||
Section 1.4. | Organizational Documents of the Surviving Entities | A-2 | ||||
Section 1.5. | Actions of Giant | A-2 | ||||
Section 1.6. | Offices of Newco; Officers and Directors | A-2 | ||||
Section 1.7. | Closing | A-3 | ||||
ARTICLE II EFFECTS OF THE MERGER | A-3 | |||||
Section 2.1. | Conversion of Giant Securities | A-3 | ||||
Section 2.2. | Exchange of Certificates | A-3 | ||||
Section 2.3. | Options and other Stock Awards | A-5 | ||||
ARTICLE III REPRESENTATIONS AND WARRANTIES | A-5 | |||||
Section 3.1. | Representations and Warranties of BCH | A-5 | ||||
Section 3.2. | Representations and Warranties of Giant | A-14 | ||||
Section 3.3. | Representation and Warranties of Each Seller | A-23 | ||||
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS | A-25 | |||||
Section 4.1. | Conduct of Business by BCH Pending the Merger | A-25 | ||||
Section 4.2. | Conduct of Business by Giant Pending the Merger | A-27 | ||||
Section 4.3. | Transition | A-29 | ||||
Section 4.4. | Advice of Changes | A-30 | ||||
Section 4.5. | Control of Other Party’s Business | A-30 | ||||
ARTICLE V ADDITIONAL AGREEMENTS | A-30 | |||||
Section 5.1. | Access to Information; Confidentiality | A-30 | ||||
Section 5.2. | Reasonable Best Efforts; Regulatory Approvals | A-30 | ||||
Section 5.3. | Preparation of theForm S-4 and the Proxy Statement | A-33 | ||||
Section 5.4. | Giant Stockholders Meeting | A-33 | ||||
Section 5.5. | Indemnification; Directors’ and Officers’ Insurance | A-34 | ||||
Section 5.6. | Public Announcements | A-35 | ||||
Section 5.7. | No Solicitation | A-35 | ||||
Section 5.8. | Affiliates | A-37 | ||||
Section 5.9. | Stock Exchange Listing | A-38 | ||||
Section 5.10. | Employee Benefit Plans | A-38 | ||||
Section 5.11. | Section 16 Matters | A-39 | ||||
Section 5.12. | Fees and Expenses | A-39 | ||||
Section 5.13. | Restrictions on Transfers of BCH Equity Interests | A-39 | ||||
Section 5.14. | Giant Rights Agreement | A-39 | ||||
Section 5.15. | Mutual Release | A-39 | ||||
Section 5.16. | Certain Tax Returns | A-40 | ||||
Section 5.17. | Additional Agreements | A-40 | ||||
Section 5.18. | Newco Rights Plan | A-40 | ||||
Section 5.19. | Incumbency Certificate | A-40 |
A-i
Table of Contents
Page | ||||||
ARTICLE VI CONDITIONS PRECEDENT | A-40 | |||||
Section 6.1. | Conditions to Each Party’s Obligation To Effect the Merger and Exchange | A-40 | ||||
Section 6.2. | Conditions to Obligations of Giant | A-41 | ||||
Section 6.3. | Conditions to Obligations of Sellers | A-41 | ||||
ARTICLE VII TERMINATION AND AMENDMENT | A-42 | |||||
Section 7.1. | Termination | A-42 | ||||
Section 7.2. | Effect of Termination | A-43 | ||||
Section 7.3. | Amendment | A-43 | ||||
Section 7.4. | Extension; Waiver | A-44 | ||||
Section 7.5. | Alternative Structure | A-44 | ||||
ARTICLE VIII GENERAL PROVISIONS | A-44 | |||||
Section 8.1. | Non-survival of Representations, Warranties and Agreements | A-44 | ||||
Section 8.2. | Certain Definitions | A-44 | ||||
Section 8.3. | Notices | A-47 | ||||
Section 8.4. | Interpretation | A-48 | ||||
Section 8.5. | Counterparts | A-49 | ||||
Section 8.6. | Entire Agreement; No Third Party Beneficiaries | A-49 | ||||
Section 8.7. | Governing Law | A-49 | ||||
Section 8.8. | Severability | A-49 | ||||
Section 8.9. | Assignment | A-49 | ||||
Section 8.10. | Submission to Jurisdiction | A-49 | ||||
Section 8.11. | Enforcement | A-50 | ||||
Section 8.12. | WAIVER OF JURY TRIAL | A-50 | ||||
Section 8.13. | Sellers Representative | A-50 |
A-ii
Table of Contents
Actions | 3.1(g) | |
Affiliates | 8.2 | |
Agreement | Preamble | |
BCH | Preamble | |
BCH Benefit Plan | 3.1(g) | |
BCH Continuing Employees | 3.1(g) | |
BCH Disclosure Schedule | 3.1 | |
BCH Equity Interests | 3.1(b) | |
BCH ERISA Affiliate | 3.1(g) | |
BCH Financial Advisor | 3.1(h) | |
BCH Intellectual Property | 3.1(g) | |
BCH Material Contracts | 3.1(g) | |
BCH Real Property | 3.1(g) | |
BCH Securities | 3.1(b) | |
BCH’s Current Premium | 5.5(c) | |
Benefit Plans | 3.1(g) | |
Blocker Reorganizations | Recitals | |
Book-Entry Shares | 2.2(a) | |
Business Day | 8.2 | |
Capitalization Date | 32(b) | |
CERCLA | 3.1(k)(ii) | |
Certificates | 2.2(a) | |
Certificates of Merger | 1.2(a) | |
Closing | 1.7 | |
Closing Date | 1.7 | |
Code | Recitals | |
Commitment Letter | 3.2(y) | |
Confidentiality Agreement | 5.1(b) | |
Continuing BCH Indemnified Parties | 5.5(b) | |
Continuing Giant Indemnified Parties | 5.5(b) | |
Continuing Indemnified Parties | 5.5(b) | |
Delaware Secretary of State | 1.2(a) | |
DGCL | 1.1(b) | |
Effective Time | 1.2(b) | |
Environmental Claim | 3.1(k)(iii) | |
Environmental Laws | 3.1(k)(ii) | |
ERISA | 3.1(g) | |
Exchange | 1.1(b) | |
Exchange Act | 8.2 | |
Exchange Agent | 8.2 | |
Exchange Fund | 3.2(h) | |
Expense Reimbursement Amount | 3.1(g) | |
Field Holdings | Preamble | |
Financing | 3.2(y) |
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FOF V-A | Preamble | |
FOF V-B | Preamble | |
Form S-4 | 3.1(g) | |
GAAP | 8.2 | |
Giant | Preamble | |
Giant Adverse Recommendation Change | 3.2(h) | |
Giant Benefit Plan | 3.2(h) | |
Giant Common Stock | 2.1(a) | |
Giant Continuing Employees | 3.1(g) | |
Giant Disclosure Schedule | 3.2 | |
Giant ERISA Affiliate | 3.2(h) | |
Giant Financial Advisor | 3.2(h) | |
Giant Financial Statements | 3.2(e) | |
Giant Intellectual Property | 1.1(a) | |
Giant Material Contracts | 3.2(h) | |
Giant Options | 2.3(a) | |
Giant Preferred Stock | 3.1(g) | |
Giant Real Property | 3.2(h) | |
Giant Recommendation | 3.1(g) | |
Giant Rights | 3.2(u) | |
Giant Rights Agreement | 3.2(u) | |
Giant SEC Reports | 3.2(h) | |
Giant Securities | 3.1(g) | |
Giant Stock Award | 2.3(b) | |
Giant Stock Plans | 3.2(b) | |
Giant Stockholder Approval | 3.2(h) | |
Giant Stockholders’ Meeting | 5.3 | |
Giant’s Current Premium | 5.5(d) | |
Governmental Authority | 8.2 | |
Hazardous Material | 3.1(k)(iv) | |
HSR Act | 3.1(c)(iii) | |
Indebtedness | 8.2 | |
Infringe | 3.1(g) | |
Intellectual Property | 3.1(g) | |
Joinder | 5.13(a) | |
Key Personnel | 8.2 | |
Law | 8.2 | |
Lien | 8.2 | |
Material Adverse Effect | 8.2 | |
Material Contract | 8.2 | |
Merger Consideration | 2.1(a) | |
Merger Sub | Preamble | |
Mergers | 1.1(a) | |
Newco | Preamble | |
Newco Common Stock | 3.2 |
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Newco Continuing Employees | 3.1(g) | |
Notice of Superior Proposed Recommendation Change | 5.7(b) | |
Orders | 3.1(g) | |
Permitted Liens | 8.2 | |
Person | 8.2 | |
Proxy Materials | 5.7(c)(c) | |
Proxy Statement | 5.3 | |
RCRA | 3.1(k)(ii) | |
Released Claims | 5.15 | |
Released Parties | 3.1(g) | |
Representatives | 5.7(a) | |
Requisite BCH Regulatory Approvals | 3.1(c)(iii) | |
Requisite Giant Regulatory Approvals | 3.1(g) | |
Requisite Regulatory Approvals | 3.1(g) | |
SEC | 8.2 | |
Securities Act | 8.2 | |
Seller Consideration | 1.1(b) | |
Sellers | Preamble | |
Sellers Disclosure Schedule | 3.1 | |
Sellers Representative | 8.13(a) | |
Significant Subsidiary | 8.2 | |
Subsidiary | 8.2 | |
Superior Proposal | 3.2(h) | |
Takeover Proposal | 5.7(a) | |
Tax | 8.2 | |
Tax Return | 8.2 | |
taxable | 8.2 | |
taxes | 8.2 | |
Termination Fee | 7.2(b) | |
TPG IV | Preamble | |
TPG IV — AIV | Preamble | |
TPG V | Preamble | |
TPG V — AIV | Preamble | |
Transfer | 5.13 | |
Transferee Seller | 5.13 | |
Voting Agreement | Recitals | |
WARN Act | 8.2 |
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c/o Texas Pacific Group
301 Commerce Street, Suite 3300
Fort Worth, TX 76102
Attention: General Counsel
Facsimile No.:(817) 871-4010
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425 Lexington Avenue
New York, New York 10017
Attention: David J. Sorkin
Andrew W. Smith
Facsimile No.:(212) 455-2502
c/o Texas Pacific Group
301 Commerce Street, Suite 3300
Fort Worth, TX 76102
Attention: General Counsel
Facsimile No.:(817) 871-4010
425 Lexington Avenue
New York, New York 10017
Attention: David J. Sorkin
Andrew W. Smith
Facsimile No.:(212) 455-2502
814 Livingston Court
Marietta, GA 30067
Attention: General Counsel
Facsimile No.:(770) 644-2929
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: Sidney J. Nurkin
William Scott Ortwein
Facsimile No.:(404) 253-8376
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By: | /s/ David W. Scheible |
Title: | President and Chief Executive Officer |
By: | /s/ Lawrence I. Field |
Title: | President |
By: | /s/ Clive Bode |
Title: | Vice President |
By: | Bluegrass Container Holdings, LLC, its |
By: | /s/ Clive Bode |
Title: | Vice President |
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By: | TPG GenPar IV, L.P. |
By: | TPG Advisors IV, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
By: | TPG GenPar IV, L.P. |
By: | TPG Advisors IV, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
By: | TPG GenPar V, L.P. |
By: | TPG Advisors V, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
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By: | TPG GenPar V, L.P. |
By: | TPG Advisors V, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
By: | TPG GenPar V, L.P. |
By: | TPG Advisors V, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
By: | TPG GenPar V, L.P. |
By: | TPG Advisors V, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
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By: | TPG GenPar V, L.P. |
By: | TPG Advisors V, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
By: | /s/ David W. Scheible |
Title: | President and Chief Executive Officer |
By: | /s/ David W. Scheible |
Title: | President and Chief Executive Officer |
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ARTICLE I STOCKHOLDERS | C-1 | |||||||
Section 1.01. | Annual Meetings | C-1 | ||||||
Section 1.02. | Special Meetings | C-1 | ||||||
Section 1.03. | Notice of Meetings; Waiver | C-1 | ||||||
Section 1.04. | Quorum | C-1 | ||||||
Section 1.05. | Voting | C-1 | ||||||
Section 1.06. | Voting by Ballot | C-2 | ||||||
Section 1.07. | Adjournment | C-2 | ||||||
Section 1.08. | Proxies | C-2 | ||||||
Section 1.09. | Conduct of Meetings | C-2 | ||||||
Section 1.10. | Notice of Stockholder Business and Nominations | C-3 | ||||||
Section 1.11. | Inspectors of Elections | C-5 | ||||||
Section 1.12. | Opening and Closing of Polls | C-6 | ||||||
Section 1.13. | No Stockholder Action by Written Consent | C-6 | ||||||
ARTICLE II BOARD OF DIRECTORS | C-6 | |||||||
Section 2.01. | General Powers | C-6 | ||||||
Section 2.02. | Number of Directors | C-6 | ||||||
Section 2.03. | Classified Board of Directors; Election of Directors | C-6 | ||||||
Section 2.04. | Chairman of the Board | C-6 | ||||||
Section 2.05. | Annual and Regular Meetings | C-7 | ||||||
Section 2.06. | Special Meetings; Notice | C-7 | ||||||
Section 2.07. | Quorum; Voting | C-7 | ||||||
Section 2.08. | Adjournment | C-7 | ||||||
Section 2.09. | Action Without a Meeting | C-7 | ||||||
Section 2.10. | Regulations; Manner of Acting | C-7 | ||||||
Section 2.11. | Action by Telephonic Communications | C-8 | ||||||
Section 2.12. | Resignations | C-8 | ||||||
Section 2.13. | Compensation | C-8 | ||||||
ARTICLE III COMMITTEES OF THE BOARD OF DIRECTORS | C-8 | |||||||
Section 3.01. | Committees | C-8 | ||||||
Section 3.02. | Powers | C-8 | ||||||
Section 3.03. | Proceedings | C-8 | ||||||
Section 3.04. | Quorum and Manner of Acting | C-8 | ||||||
Section 3.05. | Action by Telephonic Communications | C-9 | ||||||
Section 3.06. | Resignations | C-9 | ||||||
Section 3.07. | Removal | C-9 | ||||||
Section 3.08. | Vacancies | C-9 | ||||||
ARTICLE IV OFFICERS | C-9 | |||||||
Section 4.01. | Number | C-9 | ||||||
Section 4.02. | Election | C-9 | ||||||
Section 4.03. | The President and Chief Executive Officer | C-9 | ||||||
Section 4.04. | The Vice Presidents | C-10 | ||||||
Section 4.05. | The Secretary | C-10 | ||||||
Section 4.06. | The Chief Financial Officer | C-10 | ||||||
Section 4.07. | The Treasurer | C-11 | ||||||
Section 4.08. | Other Officers Elected by Board of Directors | C-11 | ||||||
Section 4.09. | Removal and Resignation; Vacancies | C-11 | ||||||
Section 4.10. | Authority and Duties of Officers | C-11 |
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ARTICLE V CAPITAL STOCK | C-11 | |||||||
Section 5.01. | Certificates of Stock, Uncertificated Shares | C-11 | ||||||
Section 5.02. | Signatures; Facsimile | C-11 | ||||||
Section 5.03. | Lost, Stolen or Destroyed Certificates | C-12 | ||||||
Section 5.04. | Transfer of Stock | C-12 | ||||||
Section 5.05. | Record Date | C-12 | ||||||
Section 5.06. | Registered Stockholders | C-12 | ||||||
Section 5.07. | Transfer Agent and Registrar | C-12 | ||||||
ARTICLE VI INDEMNIFICATION | C-13 | |||||||
Section 6.01. | Nature of Indemnity | C-13 | ||||||
Section 6.02. | Successful Defense | C-13 | ||||||
Section 6.03. | Determination that Indemnification is Proper | C-13 | ||||||
Section 6.04. | Advance Payment of Expenses | C-13 | ||||||
Section 6.05. | Procedure for Indemnification | C-14 | ||||||
Section 6.06. | Survival; Preservation of Other Rights | C-14 | ||||||
Section 6.07. | Insurance | C-14 | ||||||
Section 6.08. | Severability | C-15 | ||||||
ARTICLE VII OFFICES | C-15 | |||||||
Section 7.01. | Registered Office | C-15 | ||||||
Section 7.02. | Other Offices | C-15 | ||||||
ARTICLE VIII GENERAL PROVISIONS | C-15 | |||||||
Section 8.01. | Dividends | C-15 | ||||||
Section 8.02. | Reserves | C-15 | ||||||
Section 8.03. | Execution of Instruments | C-15 | ||||||
Section 8.04. | Deposits | C-15 | ||||||
Section 8.05. | Checks | C-16 | ||||||
Section 8.06. | Sale, Transfer, etc. of Securities | C-16 | ||||||
Section 8.07. | Voting as Stockholder | C-16 | ||||||
Section 8.08. | Fiscal Year | C-16 | ||||||
Section 8.09. | Seal | C-16 | ||||||
Section 8.10. | Books and Records | C-16 | ||||||
ARTICLE IX AMENDMENT OF BY-LAWS | C-16 | |||||||
Section 9.01. | Amendment | C-16 | ||||||
ARTICLE X CONSTRUCTION | C-16 | |||||||
Section 10.01. | Construction | C-16 |
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GRAPHIC PACKAGING HOLDING COMPANY
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BY AND AMONG
BLUEGRASS CONTAINER HOLDINGS, LLC,
THE SEVERAL STOCKHOLDERS OF GRAPHIC PACKAGING CORPORATION
PARTY HERETO
AND
(SOLELY FOR PURPOSES OF SECTION 5.2 HEREOF)
GRAPHIC PACKAGING CORPORATION
DATED AS OF JULY 9, 2007
Page | ||||||
ARTICLE I General | D-1 | |||||
1.1. | Defined Terms | D-1 | ||||
ARTICLE II VOTING | D-3 | |||||
2.1. | Agreement to Vote | D-3 | ||||
2.2. | No Inconsistent Agreements | D-3 | ||||
2.3. | Proxy | D-4 | ||||
ARTICLE III REPRESENTATIONS AND WARRANTIES | D-4 | |||||
3.1. | Representations and Warranties of the Stockholders | D-4 | ||||
ARTICLE IV OTHER COVENANTS | D-5 | |||||
4.1. | Prohibition on Transfers, Other Actions | D-5 | ||||
4.2. | Stock Dividends, etc. | D-6 | ||||
4.3. | No Solicitation | D-6 | ||||
4.4. | Notice of Acquisitions, Proposals Regarding Prohibited Transactions | D-6 | ||||
4.5. | Stockholder Capacity | D-6 | ||||
4.6. | Waiver of Appraisal Rights | D-7 | ||||
4.7. | Further Assurances | D-7 | ||||
ARTICLE V MISCELLANEOUS | D-7 | |||||
5.1. | Termination | D-7 | ||||
5.2. | Legends; Stop Transfer Order | D-7 | ||||
5.3. | No Ownership Interest | D-8 | ||||
5.4. | Notices | D-8 | ||||
5.5. | Interpretation | D-9 | ||||
5.6. | Counterparts | D-9 | ||||
5.7. | Entire Agreement | D-9 | ||||
5.8. | Governing Law; Consent to Jurisdiction; Waiver of Jury Trial | D-9 | ||||
5.9. | Amendment; Waiver | D-10 | ||||
5.10. | Remedies | D-10 | ||||
5.11. | Severability | D-10 | ||||
5.12. | Successors and Assigns; Third Party Beneficiaries | D-10 | ||||
Schedule 1: Stockholder Information |
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Affiliate | D-1 | |||
Agreement | D-1 | |||
BCH | D-1 | |||
Beneficial Ownership | D-1 | |||
Beneficially Own | D-2 | |||
Beneficially Owned | D-2 | |||
Common Stock | D-1 | |||
control | D-2 | |||
Covered Shares | D-2 | |||
Existing Shares | D-1 | |||
Giant | D-1 | |||
HSR Act | D-5 | |||
Lien | D-2 | |||
Merger Sub | D-1 | |||
Orders | D-5 | |||
Permitted Transfer | D-2 | |||
Person | D-2 | |||
Representatives | D-2 | |||
Specified Rights | D-4 | |||
Stockholder | D-1 | |||
Subsidiary | D-2 | |||
Transaction Agreement | D-1 | |||
Transfer | D-2 |
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c/o Texas Pacific Group
301 Commerce Street, Suite 3300
Fort Worth, Texas 76102
Facsimile:(817) 871-4010
Attention: General Counsel
425 Lexington Avenue
New York, New York 10017
Attention: David J. Sorkin
Facsimile No.:(212) 455-2502
814 Livingston Court
Marietta, GA 30067
Facsimile(770) 644-2929
Attention: Senior Vice President,
General Counsel and Secretary
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One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Facsimile:(404) 881-4777
Attention: Sidney J. Nurkin, Esq.
William Scott Ortwein, Esq.
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By: | /s/ Clive Bode |
Title: | Vice President |
By: | CD&R Associates V |
By: | CD&R Investment Associates II, Inc., |
By: | /s/ Kevin J. Conway |
Title: | Vice President and Secretary |
By: | /s/ Peter J. Rothenberg |
Title: | Attorney-in-Fact |
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By: | /s/ Jeffrey H. Coors |
Title: | Trustee and Treasurer |
By: | Adolph Coors Company LLC, Trustee | |
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
By: | Adolph Coors Company LLC, Trustee | |
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
By: | Adolph Coors Company LLC, Trustee | |
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
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By: | Adolph Coors Company LLC, Trustee | |
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
By: | Adolph Coors Company LLC, Trustee | |
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
By: | Adolph Coors Company LLC, Trustee | |
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
By: | Adolph Coors Company LLC, Trustee | |
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
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By: | /s/ Jeffrey H. Coors |
Title: | Trustee |
By: | /s/ Jeffrey H. Coors |
Title: | Trustee |
By: | /s/ Jeffrey H. Coors |
Title: | Trustee |
By: | /s/ David W. Scheible |
Title: | President and Chief Executive Officer |
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Name | Existing Shares | |||
Clayton, Dubilier & Rice Fund V Limited Partnership | 34,222,500 | |||
EXOR Group S.A. | 34,222,500 | |||
Adolph Coors Foundation | 503,774 | |||
Adolph Coors Jr. Trust dated September 12, 1969 | 2,800,000 | |||
Grover C. Coors Trust dated August 7, 1952 | 51,211,864 | |||
May Kistler Coors Trust dated September 24, 1965 | 1,726,652 | |||
Augusta Coors Collbran Trust dated July 5, 1946 | 1,015,350 | |||
Bertha Coors Munroe Trust dated July 5, 1946 | 1,140,490 | |||
Herman F. Coors Trust dated July 5, 1946 | 1,435,000 | |||
Louise C. Porter Trust dated July 5, 1946 | 920,220 | |||
Janet H. Coors Irrevocable Trust FBO Frances M. Baker, dated July 27, 1976 | 59,356 | |||
Janet H. Coors Irrevocable Trust FBO Frank E. Ferrin, dated July 27, 1976 | 59,354 | |||
Janet H. Coors Irrevocable Trust FBO Joseph J. Ferrin, dated July 27, 1976 | 59,354 |
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375 Park Avenue
New York, New York 10152
Facsimile:(212) 407-5260
Attention: Kevin J. Conway
919 Third Avenue
New York, New York 10022
Facsimile:(212) 909-6836
Attention: Paul S. Bird, Esq.
c/o EXOR USA Inc.
375 Park Avenue
Suite 1901
New York, NY 10152
Facsimile:(212) 355-5690
Attention: Michael J. Bartolotta
1285 Avenue of the Americas
New York, NY10019-6064
Facsimile:(212) 757-3990
Attention: Marc E. Perlmutter, Esq.
Grover C. Coors Trust dated August 7, 1952
May Kistler Coors Trust dated September 24, 1965
Augusta Coors Collbran Trust dated July 5, 1946
Bertha Coors Munroe Trust dated July 5, 1946
Louise Coors Porter Trust dated July 5, 1946
Herman F. Coors Trust dated July 5, 1946
2120 Carey Avenue, Suite 412
Cheyenne, WY 82001
Facsimile:(307) 635-7430
Attention: Jeffrey H. Coors
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Janet H. Coors Irrevocable Trust FBO Frank E. Ferrin dated July 27, 1976
Janet H. Coors Irrevocable Trust FBO Joseph J. Ferrin dated July 27, 1976
c/o CBCo Mail Stop VR 900
Golden, CO 80401
4100 E. Mississippi Ave.
Suite 1850
Denver, CO 80246
2120 Carey Avenue, Suite 300
Cheyenne, WY 82003
Facsimile:(307) 635-0413
Attention: Thomas N. Long, Esq.
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Page | ||||||
ARTICLE I REPRESENTATIONS AND WARRANTIES | E-1 | |||||
Section 1.1 | Representations and Warranties of Each Stockholder | E-1 | ||||
Section 1.2 | Representations and Warranties of the Company | E-2 | ||||
ARTICLE II CORPORATE GOVERNANCE AND MANAGEMENT | E-2 | |||||
Section 2.1 | Board of Directors | E-2 | ||||
Section 2.2 | Actions of the Board; Affiliate Agreements | E-5 | ||||
Section 2.3 | Board Committees | E-5 | ||||
Section 2.4 | Chairman of the Board; Executive Officers | E-6 | ||||
ARTICLE III RESTRICTIONS ON TRANSFER | E-6 | |||||
Section 3.1 | General | E-6 | ||||
Section 3.2 | Transfers to Permitted Transferees | E-6 | ||||
Section 3.3 | Legends | E-7 | ||||
Section 3.4 | Attribution of Shares | E-8 | ||||
Section 3.5 | Standstill Agreement | E-8 | ||||
ARTICLE IV OTHER COVENANTS AND AGREEMENTS | E-9 | |||||
Section 4.1 | Family Representative | E-9 | ||||
Section 4.2 | Confidentiality | E-9 | ||||
Section 4.3 | Further Assurances | E-10 | ||||
Section 4.4 | Voting: No Conflicting Provisions | E-10 | ||||
Section 4.5 | HSR Filings | E-10 | ||||
ARTICLE V DEFINITIONS | E-11 | |||||
ARTICLE VI MISCELLANEOUS | E-13 | |||||
Section 6.1 | Severability | E-13 | ||||
Section 6.2 | Effectiveness; Term of Agreement | E-13 | ||||
Section 6.3 | Enforcement | E-14 | ||||
Section 6.4 | Notices | E-14 | ||||
Section 6.5 | Entire Agreement | E-15 | ||||
Section 6.6 | Interpretation | E-15 | ||||
Section 6.7 | Counterparts | E-15 | ||||
Section 6.8 | Governing Law | E-16 | ||||
Section 6.9 | Assignment | E-16 | ||||
Section 6.10 | No Third Party Beneficiaries | E-16 | ||||
Section 6.11 | Amendment; Waivers, etc. | E-16 | ||||
Section 6.12 | Submission to Jurisdiction; Waivers | E-16 | ||||
Section 6.13 | Waiver of Jury Trial | E-17 | ||||
Section 6.14 | Termination of Existing Stockholders Agreement | E-17 |
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Attention: | Senior Vice President, |
Attention: | Sidney J. Nurkin, Esq. |
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Attention: | David J. Sorkin, Esq. |
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By: | /s/ David W. Scheible |
Title: | President and Chief Executive Officer |
FUND V LIMITED PARTNERSHIP
By: | CD&R Associates V |
Inc., its managing general partner
By: | /s/ Kevin J. Conway |
Title: | Vice President and Secretary |
By: | /s/ Peter J. Rothenberg |
Title: | Attorney-in-Fact |
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By: | /s/ Jeffrey H. Coors |
Title: | Trustee and Treasurer |
SEPTEMBER 12, 1969
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
AUGUST 7, 1952
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
SEPTEMBER 24, 1965
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
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DATED JULY 5, 1946
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
JULY 5, 1946
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
JULY 5, 1946
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
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JULY 5, 1946
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
FRANCES M. BAKER DATED JULY 27, 1976
By: | /s/ Jeffrey H. Coors |
Title: | Trustee |
FRANK E. FERRIN DATED JULY 27, 1976
By: | /s/ Jeffrey H. Coors |
Title: | Trustee |
JOSEPH J. FERRIN DATED JULY 27, 1976
By: | /s/ Jeffrey H. Coors |
Title: | Trustee |
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By: | /s/ Lawrence I. Field |
Title: | President |
By: | TPG GenPar IV, L.P. |
By: | TPG Advisors IV, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
By: | TPG GenPar IV, L.P. |
By: | TPG Advisors IV, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
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By: | TPG GenPar V, L.P. |
By: | TPG Advisors V, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
By: | TPG GenPar V, L.P. |
By: | TPG Advisors V, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
By: | /s/ Clive Bode |
Title: | Vice President |
By: | /s/ Clive Bode |
Title: | Vice President |
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By: | TPG GenPar V, L.P. |
By: | TPG Advisors V, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
By: | TPG GenPar V, L.P. |
By: | TPG Advisors V, Inc. its General Partner | |
By: | /s/ Clive Bode |
Title: | Vice President |
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(Two directors to be designated by the TPG Entities within 45 days of the date hereof) (One Independent Director to be proposed by Giant within 45 days of the date hereof and subject to the approval of the TPG Entities, which approval shall not be unreasonably withheld)
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ARTICLE I DEFINITIONS | F-2 | |||||||
1.1 | Definitions | F-2 | ||||||
ARTICLE II REGISTRATION | F-4 | |||||||
2.1 | Registration on Request | F-4 | ||||||
2.2 | Incidental Registration | F-7 | ||||||
2.3 | Registration Procedures | F-8 | ||||||
2.4 | Underwritten Offerings | F-11 | ||||||
2.5 | Preparation; Reasonable Investigation | F-13 | ||||||
2.6 | Other Registrations | F-13 | ||||||
2.7 | Finance Committee | F-14 | ||||||
2.8 | Indemnification | F-14 | ||||||
ARTICLE III MISCELLANEOUS | F-17 | |||||||
3.1 | Rule 144; Legended Securities; etc. | F-17 | ||||||
3.2 | Amendments and Waivers | F-17 | ||||||
3.3 | Nominees for Beneficial Owners | F-17 | ||||||
3.4 | Successors, Assigns and Transferees | F-18 | ||||||
3.5 | Notices | F-18 | ||||||
3.6 | No Inconsistent Agreements | F-18 | ||||||
3.7 | Remedies; Attorneys’ Fees | F-18 | ||||||
3.8 | Term | F-18 | ||||||
3.9 | Severability | F-19 | ||||||
3.10 | Interpretation | F-19 | ||||||
3.11 | Counterparts | F-19 | ||||||
3.12 | Governing Law | F-19 | ||||||
3.13 | Time of the Essence; Computation of Time | F-19 | ||||||
3.14 | No Third Party Beneficiaries | F-19 | ||||||
3.15 | Submission to Jurisdiction; Waivers | F-19 | ||||||
3.16 | Waiver of Jury Trial | F-20 | ||||||
3.17 | Entire Agreement | F-20 |
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814 Livingston Court
Marietta, Ga 30067
Facsimile (770) 644-2929
Attention: Senior Vice President,
General Counsel and Secretary
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Facsimile:(404) 881-4777
Attention: Sidney J. Nurkin, Esq.
William Scott Ortwein, Esq.
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By: | /s/ David W. Scheible |
Title: | President and Chief Executive Officer |
By: | CD&R Associates V Limited Partnership, |
By: | CD&R Investment Associates II, Inc., |
By: | /s/ Kevin J. Conway |
Title: | Vice President and Secretary |
By: | /s/ Peter J. Rothenberg |
Title: | Attorney-in-Fact |
By: | /s/ Jeffrey H. Coors |
Title: | Trustee and Treasurer |
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By: | Adolph Coors Company LLC, Trustee | |
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
AUGUST 7, 1952
By: | Adolph Coors Company LLC, Trustee | |
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
By: | Adolph Coors Company LLC, Trustee | |
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
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AUGUSTA COORS COLLBRAN TRUST DATED JULY 5, 1946 |
By: | Adolph Coors Company LLC, Trustee | |
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
JULY 5, 1946
By: | Adolph Coors Company LLC, Trustee | |
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
JULY 5, 1946
By: | Adolph Coors Company LLC, Trustee | |
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
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HERMAN F. COORS TRUST DATED JULY 5, 1946 |
By: | Adolph Coors Company LLC, Trustee | |
By: | /s/ Jeffrey H. Coors |
Title: | Co-Chairman |
By: | /s/ Jeffrey H. Coors |
Title: | Trustee |
By: | /s/ Jeffrey H. Coors |
Title: | Trustee |
By: | /s/ Jeffrey H. Coors |
Title: | Trustee |
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TPG BLUEGRASS IV, L.P. |
By: | TPG GenPar IV, L.P. |
By: | TPG Advisors IV, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
By: | TPG GenPar IV, L.P. |
By: | TPG Advisors IV, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
By: | TPG GenPar V, L.P. |
By: | TPG Advisors V, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
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By: | TPG GenPar V, L.P. |
By: | TPG Advisors V, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
By: | /s/ Clive Bode |
Title: | Vice President |
By: | /s/ Clive Bode |
Title: | Vice President |
By: | Bluegrass Container Holdings, LLC, its Managing Member | |
By: | /s/ Clive Bode |
Title: | Vice President |
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TPG FOF V—A, L.P. |
By: | TPG GenPar V, L.P. |
By: | TPG Advisors V, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
By: | TPG GenPar V, L.P. |
By: | TPG Advisors V, Inc. |
By: | /s/ Clive Bode |
Title: | Vice President |
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By: | /s/ Lawrence I. Field |
Title: | President |
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919 Third Avenue
New York, New York 10022
Facsimile:(212) 909-6836
Attention: Paul S. Bird, Esq.
c/o EXOR USA Inc.
1285 Avenue of the Americas
New York, NY10019-6064
Facsimile:(212) 757-3990
Attention: Marc E. Perlmutter, Esq.
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425 Lexington Avenue
New York, New York 10017
Facsimile:(212) 455-2502
Attention: David J. Sorkin
Andrew W. Smith
2120 Carey Avenue, Suite 412
Cheyenne, WY 82001
Facsimile:(307) 635-7430
Attention: Jeffrey H. Coors
c/o CBCo Mail Stop VR 900
Golden, CO 80401
2120 Carey Avenue, Suite 300
Cheyenne, WY 82003
Facsimile:(307) 635-0413
Attention: Thomas N. Long, Esq.
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450 E. North Avenue
Carol Stream, IL 60188
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Tel: 212-902-1000 | Fax: 212-902-3000
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10:00 a.m. (local time)
Atlantic Center Plaza
1180 West Peachtree Street, 15th Floor
Atlanta, Georgia 30309
Graphic Packaging Corporation 814 Livingston Court, Marietta, Georgia 30067 | proxy |
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• | Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week, until 12:00 p.m. (CT) on January 16, 2008. | |
• | Please have your proxy card and the last four digits of your Social Security Number or Tax Identification Number available. Follow the simple instructions the voice prompt provides you. |
• | Use the Internet to vote your proxy 24 hours a day, 7 days a week, until 12:00 p.m. (CT) on January 16, 2008. | |
• | Please have your proxy card and the last four digits of your Social Security Number or Tax Identification Number available. Follow the simple instructions to obtain your records and create an electronic ballot. |
6Please detach here6
The Board of Directors Recommends a Vote FOR Proposal 1. |
1. | To adopt the transaction agreement and plan of merger, dated as of July 9, 2007, by and among the Company, Bluegrass Container Holdings, LLC, certain affiliates of TPG Capital, New Giant Corporation, and Giant Merger Sub, Inc. and to approve the transactions contemplated by such transaction agreement. | o For | o Against | o Abstain |
2. | To approve a provision in New Giant Corporation’s restated certificate of incorporation authorizing 1.1 billion shares of capital stock. THIS PROVISION WILL ONLY BE IMPLEMENTED IF PROPOSAL 1 IS ALSO APPROVED. | o For | o Against | o Abstain | ||||
3. | To approve the postponement or adjournment of the special meeting to a later date, if determined to be necessary. | o For | o Against | o Abstain |
Address Change? Mark Box o Indicate changes below: | Date | |||
Signature(s) in Box | ||||
Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy. |