R.J. Reynolds Tobacco Completes Sale of RJR Packaging
May 02 2005 - 6:23PM
PR Newswire (US)
R.J. Reynolds Tobacco Completes Sale of RJR Packaging
WINSTON-SALEM, N.C., May 2 /PRNewswire-FirstCall/ -- R.J. Reynolds
Tobacco Company (R.J. Reynolds) and RJR Packaging, L.L.C. today
closed the sale of the assets and business of RJR Packaging to five
packaging companies. The buyers have agreed to pay $48.2 million
for the business, and entered into long-term tobacco packaging
materials supply agreements with R.J. Reynolds. "The sale
represents an opportunity for the packaging business to maximize
its potential by partnering with leaders in the packaging
industry," said Jeffrey A. Eckmann, executive vice president of
strategy, integration, information technology and business
development for Reynolds American Inc., the parent company of R.J.
Reynolds. "These companies have a long-term interest in investing
in and growing that business, whereas R.J. Reynolds' focus is on
growing its cigarette business." The RJR Packaging assets,
facilities and supply agreement rights for certain business areas
were acquired as follows: - Alcan Packaging Food and Tobacco Inc.
-- R.J. Reynolds' printed packaging, including cartons, boxes and
labels; - Alcoa Flexible Packaging, L.L.C. -- R.J. Reynolds'
cigarette foil and inner frame; - Southern Graphic Systems, Inc. --
cylinder engraving and prepress services; - Mundet Inc. -- R.J.
Reynolds' tipping and low-ignition propensity paper; - Oracle
Flexible Packaging, Inc. -- non-R.J. Reynolds, or external,
packaging business. Oracle also acquired RJR Packaging's two main
facilities, located in Winston-Salem at 1300 Cunningham Avenue and
190 East Polo Road. RJR Packaging currently employs 740 people, and
it is expected that at least 650 of them will ultimately receive
offers for ongoing employment from one of the buyers, or from R.J.
Reynolds. Effective immediately after the sale, nine current RJR
Packaging employees will become employees of Southern Graphic
Systems, and about 75 employees will transfer to R.J. Reynolds
Tobacco Co. The balance of RJR Packaging employees will become
employees of Oracle Flexible Packaging. Over the next 24 months,
the buyers will transition employees from Oracle to each company's
individual payroll. Displaced employees will be eligible to receive
severance benefits equaling two weeks of pay for every year of
service (with a minimum of 26 weeks of pay), as well as a $25,000
bonus for those who stay the required period of time requested by
the buyers during the transition period. "From the beginning of
this process, it was our goal to find buyers who would offer
ongoing employment to the majority of current RJR Packaging
employees," Eckmann said. "RJR Packaging has an experienced,
dedicated workforce that will be a real asset to the new buyers.
"The closing of this sale allows R.J. Reynolds to focus on its core
business of manufacturing and marketing cigarettes," Eckmann said.
"Our supply agreements with the buyers will provide R.J. Reynolds
with reliable, cost-efficient, high quality packaging materials
going forward, and we are committed to making those relationships
successful and mutually beneficial." Morgan Stanley acted as
financial advisor to R.J. Reynolds in connection with the
transaction. In December 2002, R.J. Reynolds announced its intent
to sell RJR Packaging. Following the combination of R.J. Reynolds
and the U.S. business of Brown & Williamson Tobacco Corp. in
2004, the packaging business was reassessed. In February 2005, R.J.
Reynolds and RJR Packaging signed a letter of intent to sell RJR
Packaging to the group of packaging companies. Cautionary
Information Regarding Forward-Looking Statements Statements
included in this news release that are not historical in nature are
forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements regarding R.J. Reynolds's future
performance and financial results inherently are subject to a
variety of risks and uncertainties that could cause actual results
to differ materially from those described in the forward- looking
statements. These risks and uncertainties include any adverse
impacts from the transition of our packaging operations to the
buyers. Due to these risks and uncertainties, you are cautioned not
to place undue reliance on these forward-looking statements, which
speak only as of the date of this news release. Except as provided
by federal securities laws, neither R.J. Reynolds, nor its parent
company, Reynolds American Inc., is required to publicly update or
revise any forward-looking statement, whether as a result of new
information, future events, or otherwise. R.J. Reynolds Tobacco
Company is an indirect wholly owned subsidiary of Reynolds American
Inc. (NYSE:RAI). R.J. Reynolds is the second-largest tobacco
company in the United States, manufacturing about one of every
three cigarettes sold in the United States. R.J. Reynolds' product
line includes five of the nation's 10 best-selling cigarette
brands: Camel, Winston, Kool, Salem and Doral. For more information
about R.J. Reynolds, visit the company's Web site at
http://www.rjrt.com/ . DATASOURCE: R.J. Reynolds Tobacco Company
CONTACT: Maura Payne, +1-336-741-6996, or cell, +1-336-829-9024, or
Fred McConnell, +1-336-741-7405, or cell, +1-336-406-3213, both of
R.J. Reynolds Tobacco Company Web site: http://www.rjrt.com/
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