Packaging Dynamics Corporation to Be Acquired by Kohlberg & Company
February 24 2006 - 8:00PM
PR Newswire (US)
CHICAGO, Feb. 24 /PRNewswire-FirstCall/ -- Packaging Dynamics
Corporation (NASDAQ:PKDY) (the "Company" or "Packaging Dynamics")
announced that it has entered into a definitive agreement providing
for the acquisition of the Company by an affiliate of Kohlberg
& Company ("Kohlberg"), a private investment firm. Under the
terms of agreement, each outstanding share of Packaging Dynamics'
common stock will be acquired for $14.00 in cash by a wholly-owned
subsidiary of Kohlberg affiliate Thilmany, LLC, a leading
manufacturer and converter of lightweight packaging, pressure
sensitive and industrial papers. The transaction is valued at
approximately $268 million including the assumption or refinancing
of the Company's outstanding indebtedness as of December 31, 2005.
"This transaction delivers significant value to the Packaging
Dynamics stockholders, many of whom became investors in the Company
when it was formed in 1998 or when it became public following the
spin-off from Ivex Packaging Corporation in 2002," said Frank V.
Tannura, Packaging Dynamics' Chairman and Chief Executive Officer.
"Packaging Dynamics was originally formed to create a premier
flexible packaging company providing innovative value-added
specialty packaging products. Since 1998, Packaging Dynamics has
grown from $125 million in converted product sales to over $360
million, while making four acquisitions and significant internal
investments in support of the customers and markets we serve. The
acquisition by Kohlberg and the merger with its Thilmany business
will provide the platform to continue our growth strategy and will
provide significant benefits and opportunities for our 1,300
employees as well as our valued customers and suppliers. I am
excited about the opportunities which lie ahead in our new
partnership with John Zuleger and the entire Thilmany
organization." The combined Packaging Dynamics and Thilmany
business will have annual sales of approximately $750 million,
making it one of the ten largest flexible packaging companies in
the United States. Going forward, the parent company will operate
as Packaging Dynamics and will be comprised of three business
units, each of which will be a recognized leader in its respective
markets: -- BagcraftPapercon -- A leading converter of value-added
food packaging products including a broad line of specialty bag,
wrap and sheeted products. Key market segments served include
restaurant, foodservice distribution, supermarket, and food
processor. -- Thilmany Packaging / International Converter -- A
leading producer of extrusion and adhesive laminated structures for
use in retail, consumer, medical and industrial packaging
applications, as well as building materials applications. --
Thilmany Papers -- A leading manufacturer of specialty lightweight
paper for packaging, pressure sensitive and technical &
industrial applications. Jack Rohrbach, Thilmany's Chairman, will
become non-executive Chairman of the combined company while Frank
Tannura, Packaging Dynamics' Chairman and Chief Executive Officer,
will become CEO, John Zuleger, Thilmany's President and Chief
Executive Officer, will become President and Chief Operating
Officer, and Pat Chambliss, Packaging Dynamics' Chief Financial
Officer, will continue as CFO. The merger agreement has been
approved by the company's Board of Directors. In addition,
Packaging Investors, L.P. has agreed to vote its 3,985,561 shares,
representing approximately 37% of the voting power of the Company,
in favor of the transaction. The transaction is expected to be
completed during the second quarter of 2006, subject to various
customary conditions, including approval of the transaction by the
Company's stockholders, and the expiration of the applicable
waiting period under the Hart-Scott-Rodino Act. The definitive
agreement includes customary provisions permitting the Company's
board to receive and accept an alternative proposal if that
proposal is more favorable to the Company's stockholders and
reasonably capable of being completed, subject to expense
reimbursement and payment of a termination fee. Commitment letters
have been obtained with respect to all necessary financing in
connection with the transaction. In connection with the Company's
solicitation of proxies with respect to its special meeting of
shareholders concerning the proposed transaction, the Company will
file with the SEC, and will furnish to stockholders of the Company,
a proxy statement. Stockholders are advised to read the proxy
statement when it is finalized and distributed to stockholders
because it will contain important information. Stockholders will be
able to obtain a free-of- charge copy of the proxy statement (when
available) and other relevant documents filed with the SEC from the
SEC's website at http://www.sec.gov/ . Stockholders may also obtain
a free-of-charge copy of the proxy statement and other documents
(when available) by directing a request by mail or telephone to
Packaging Dynamics Corporation, 3900 West 43rd Street, Chicago, IL
60632, Attention: Corporate Secretary, Telephone: 773 843 8000.
Deutsche Bank Securities Inc. acted as financial advisors to the
Company and provided a fairness opinion. Lehman Brothers Inc. also
provided a fairness opinion to the Company. Skadden, Arps, Slate,
Meagher & Flom LLP acted as legal advisor to the Company.
Conference Call The Company will hold a conference call on Monday,
February 27, 2006 at 10:00 a.m. (ET). For access to the Packaging
Dynamics conference call, please dial 800-762-4758 (U.S.) by 9:45
a.m. (ET) on February 27th. The access code is "Packaging Dynamics
Announcement." A replay of the call will be available from
approximately 4:00 p.m. (ET) on February 27th through 11:59 p.m.
(ET) on March 13th. To access the replay, please dial 800-475-6701
(U.S.) or 320-365- 3844 (International), access code 820366. About
Packaging Dynamics Packaging Dynamics, headquartered in Chicago,
Illinois, is a flexible packaging company that laminates and
converts paper, film and foil into various value-added flexible
packaging products for the food service, food processing, bakery,
supermarket, deli and concession markets as well as a limited
number of industrial markets. About Kohlberg & Company Founded
in 1987, Kohlberg & Company is a private equity firm with
offices in Mt. Kisco, New York and Palo Alto, California. Together
with its affiliates, Kohlberg manages more than $3.7 billion of
capital. Through its affiliates, Kohlberg has completed over 75
acquisition and recapitalization transactions in a variety of
industries, including a focus on investments in manufacturing,
healthcare, consumer products and service industries. About
Thilmany, LLC Thilmany, LLC manufactures and converts lightweight
packaging, pressure sensitive and industrial papers for use in a
variety of packaging, medical, consumer product and industrial
applications. Thilmany Papers' manufacturing operations are located
in Kaukauna and De Pere, WI, while Thilmany Packaging's converting
operations are located in Kaukana, WI. Packaging Dynamics
Forward-Looking Language The statements contained in this press
release are forward-looking and are identified by the use of
forward- looking words and phrases, such as "estimates," "plans,"
"expects," "to continue," "subject to," "target" and such other
similar phrases. These forward-looking statements are based on the
current expectations of the company. Because forward-looking
statements involve risks and uncertainties, the company's plans,
actions and actual results could differ materially. Among the
factors that could cause plans, actions and results to differ
materially from current expectations are: (i) changes in consumer
demand and prices resulting in a negative impact on revenues and
margins; (ii) raw material substitutions and increases in the costs
of raw materials, utilities, labor and other supplies; (iii)
increased competition in the company's product lines; (iv) changes
in capital availability or costs; (v) workforce factors such as
strikes or labor interruptions; (vi) the ability of the company and
its subsidiaries to develop new products, identify and execute
capital programs and efficiently integrate acquired businesses;
(vii) the cost of compliance with applicable governmental
regulations and changes in such regulations, including
environmental regulations; (viii) the general political, economic
and competitive conditions in markets and countries where the
company and its subsidiaries operate, including currency
fluctuations and other risks associated with operating in foreign
countries; and (ix) the timing and occurrence (or non-occurrence)
of transactions and events which may be subject to circumstances
beyond the control of the company and its subsidiaries. First Call
Analyst: FCMN Contact: knarcissi@pkdy.com DATASOURCE: Packaging
Dynamics Corporation CONTACT: Mr. Patrick Chambliss of Packaging
Dynamics Corporation, +1-773-843-8113 Web site:
http://www.pkdy.com/
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