Business News

Caraustar Announces Sale of Membership Interest in Premier Boxboard LLC to Temple-Inland

Friday 25. July 2008 - First Step in Plan to Refinance 7.375% Senior Notes

Caraustar Industries, Inc. (NASDAQ:CSAR) today announced that it has sold its fifty percent membership interest in Premier Boxboard LLC (PBL), to its joint venture partner, Temple- Inland Inc. (NYSE:TIN), for $62 million. Tax effects are expected to be minimal due to the company’s ability to utilize net operating loss carry forwards. Caraustar will use the proceeds of the sale to repay all outstanding debt under its Senior Credit Facility — comprised of a term loan and a revolving credit facility — totaling approximately $34 million. Excess proceeds of approximately $28 million as well as estimated availability of $44 million under the revolving line of credit will be available to the company for working capital and debt repayment needs.

Michael J. Keough, president and chief executive officer of Caraustar, stated, “The company is focused on executing its plan to refinance its 7.375 percent Senior Notes. Completing the sale of our interest in PBL is the first step in that plan and raises a portion of the funds necessary to refinance the company’s senior notes while mitigating exposure to the volatile housing market. Historically, paperboard production at PBL has been a mix of gypsum facing paper and medium. Caraustar will continue to produce gypsum facing paper at its Sweetwater mill, including higher margin specialty grades such as its SafeFace MR(TM), a mold-resistant facing paper.

“The company has engaged J.P. Morgan Securities Inc. as its financial advisor to assist in evaluating its financial alternatives. In addition, the company is continuing its efforts to execute the remaining steps in its refinancing plan.”