Business News
Rock-Tenn Completes Acquisition of Southern Container Corp.
Thursday 06. March 2008 - Rock-Tenn Company (NYSE:RKT) announced today that it has completed its previously announced acquisition of Southern Container Corp. Southern Container manufactures containerboard and corrugated packaging and is believed to have one of the lowest system costs and the highest EBITDA margins of any major integrated containerboard company in North America.
With the acquisition, Rock-Tenn becomes the eighth largest manufacturer of containerboard in North America, and continues as one of America’s leading manufacturers of bleached and recycled paperboard with annual capacity of approximately 2.3 million tons of paperboard and containerboard, pro forma annual revenues of $2.9 billion and Pro Forma Adjusted EBITDA (as hereinafter defined) of $440 million for the 12 months ended December 31, 2007.
Rock-Tenn Chairman and Chief Executive Officer, James Rubright, said, “With the acquisition of Southern Container we have completed another major step toward making Rock-Tenn the most respected and profitable integrated paperboard and packaging company in North America. We believe our very low cost mills and converting plants and reputation for exceptional product quality and service just got better with the acquisition of Southern Container.”
Rock-Tenn financed the acquisition with $1.4 billion in new financing, including $1.2 billion of new senior secured credit facilities and $200 million of 9.25% senior notes due 2016. Due to strong demand for the Company’s bank credit facilities, the Company was able to increase the size of the senior secured credit facilities from $1.0 billion to $1.2 billion, and reduce the size of the senior notes offering from $400 million to $200 million, which based on current market rates results in a reduction of annual interest expense of approximately $7.5 million per year.
Wachovia Bank, N.A., Bank of America and SunTrust Bank and certain affiliates of each arranged the syndication of the $1.2 billion senior secured credit facilities. Wachovia Capital Markets, LLC acted as financial advisor to Rock-Tenn on the transaction.
Rock-Tenn announced that based on the pro forma combination of the 12 months ended December 31, 2007 results for Rock-Tenn and the unaudited 52 weeks ended December 29, 2007 results for Southern Container and preliminary purchase price allocation, pro forma combined net income and pro forma diluted income per share of combined Rock-Tenn was $95.2 million and $2.42 per share, respectively, and Pro Forma Adjusted EBITDA (as hereinafter defined) was $440.2 million, in each case higher than the $90.3 million, $2.29 per share and $429.6 million, respectively, for the 12 months ended September 30, 2007. The pro forma net income per share of $2.42 for the combined Rock-Tenn for the 12 months ended December 31, 2007 is $0.28 per share higher than Rock-Tenn’s reported net income per share of $2.14 per share for the 12 months ended December 31, 2007.