KapStone Completes Deal for MWV Charleston Kraft Division

July 1, 2008 - KapStone Paper and Packaging Corp. said that it has completed the acquisition of MeadWestvaco's (MWV) Charleston Kraft Division.

Under the terms of the sale, KapStone acquired MWV's kraft paper mill in North Charleston, a lumber mill in Summerville, SC and chip mills located in Elgin, Hampton, Andrews and Kinards, SC, as well as 100 percent of Cogen South, LLC, the mill's on-site cogeneration facility. In 2007, the North Charleston mill produced 833,000 tons of saturating kraft, linerboard, and kraft folding carton board. MWV will continue to provide wood fiber for the North Charleston mill through a fiber supply agreement.

"The acquisition of the Charleston Kraft Division of MeadWestvaco Corporation is an important step for our company," said Roger W. Stone, chairman and CEO of KapStone. "It expands our platform from which we intend to achieve our strategic vision. We are anxious to build on the success of this business while integrating it with our existing Kraft Papers Business. We will continue to explore other strategic acquisitions."

The $485 million base purchase price was adjusted to reflect estimated working capital and capital expenditure adjustments. As a result, KapStone paid MWV approximately $475 million in cash, subject to certain post-closing adjustments. Funding for the acquisition came from borrowing under a new $515 million senior secured credit facility announced on June 12, 2008 plus $40 million of borrowings from the issuance of senior notes.

SOURCE: KapStone Paper and Packaging Corp.

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