Caraustar Industries Emerges From Chapter 11

Aug. 21, 2009 - Caraustar Industries announced that it has emerged from Chapter 11 as a newly reorganized private company eliminating approximately $135 million in debt.

Michael J. Keough, president and chief executive officer, said, "We are gratified that the company has been able to expeditiously implement its Plan of Reorganization with minimal business disruption and in record time. As a result, Caraustar emerges with a strong, stable platform from which to operate, invest and grow our business. This is a tremendous accomplishment."

Under the Plan, shares of the company's common stock will be retired and previous shareholders will receive a pro rata share of $2.9 million. The company's 7-3/8 percent and 7-1/4 percent Senior Notes have been exchanged for an aggregate of $85 million in new Senior Secured Notes and 100 percent of the common stock of the reorganized company.

Caraustar said that it has closed on a new $75 million revolving credit facility with General Electric Capital Corporation, which provides Caraustar with more than adequate liquidity to meet all of its working capital needs, including any future capital investments. The company has made no borrowings against the new facility.

According to the Caraustar, it has been very active in rationalizing its portfolio by exiting under-performing businesses, right-sizing operations through consolidation of facilities and reducing selling, general and administrative expenses. Restructuring the company's balance sheet through the exchange of debt for equity complements that effort.

"We are the same company, but with increased financial strength, organizational stability and momentum," Keough said. "Our new capital structure, combined with the cost savings achieved by operating as a private entity, provides a lean and flexible foundation for sustainable profitability."

SOURCE: Caraustar Industries Inc.

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