SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 2, 1997
CHESAPEAKE CORPORATION
(Exact Name of Registrant as Specified in Charter)
Virginia 1-3203 54-0166880
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
1021 East Cary Street, Richmond, VA 23219
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 804/697-1000
Page 1 of 5 pages.
<PAGE>
Item 5. Other Events.
On April 2, 1997, Chesapeake Corporation (the "Company")
announced that it has reached preliminary agreement in principle
with St. Laurent Paperboard Inc. ("St. Laurent") regarding the
purchase, by St. Laurent or one or more of its wholly-owned
subsidiaries, of the sole membership interest in Chesapeake Paper
Products LLC (successor to Chesapeake Paper Products Co.), a
wholly-owned subsidiary of the Company which, as of the closing
date, will own and operate directly or through one or more
wholly-owned subsidiaries (i) the Company's kraft products mill
located in West Point, Virginia, (ii) substantially all of the
assets of four box plants owned and operated by a wholly-owned
subsidiary of the Company and located in Baltimore, MD, Roanoke,
VA, Richmond, VA, and North Tonawanda, NY, and (iii) certain
assets associated with the fiber procurement and related
operations of the West Point kraft products mill. Additional
information with respect to the proposed transaction is set forth
in the Company's press release filed herewith as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits.
99.1 Press Release
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
CHESAPEAKE CORPORATION
Date: April 8, 1997 By /s/ William T. Tolley
William T. Tolley
Group Vice President-Finance
& Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Page No.
99.1 Press Release, dated April 2, 1997
NEWS RELEASE
For further information contact: For immediate release
J. P. Causey
Senior Vice President, Secretary & General Counsel
804-697-1166
Susan G. Greenbaum
Assistant Vice President, Communications
804-697-1110
Chesapeake announces possible sale of kraft products mill
Richmond, VA, April 2, 1997 -- Chesapeake Corporation (NYSE:CSK)
announced today that it has reached preliminary agreement in
principle with St. Laurent Paperboard Inc. (Toronto and
Montreal:SPI) regarding St. Laurent's purchase of Chesapeake's
West Point, VA, kraft products mill, four box plants and other
related assets for approximately $508 million. The proposed
transaction would represent a major step forward in Chesapeake's
long-term business strategy of focusing on its faster-growing
packaging and tissue operations.
Under the terms of the proposed transaction, Chesapeake would
retain ownership of its timberlands and would enter into a
15-year agreement to supply the West Point mill with a
substantial portion of its virgin fiber requirements at market
prices. St. Laurent would also enter into a five-year agreement
to supply paper at market prices to Chesapeake's packaging
operations. Chesapeake said the Corporation expects to record a
gain on the sale upon the closing of the transaction.
Chesapeake Corporation, headquartered in Richmond, VA, is a
diversified packaging and paper company whose primary businesses
are packaging, tissue and kraft products. St. Laurent,
headquartered in Montreal, Quebec, Canada, is a North American
supplier and manufacturer of paperboard products, with sales in
Canada, the United States and selected international markets.
St. Laurent is a producer of high-strength, white-top linerboard,
one of the principal products manufactured by Chesapeake's West
Point mill.
J. Carter Fox, Chairman, President and Chief Executive Officer of
Chesapeake, said, "The decision to consider the purchase offer
initiated by St. Laurent for the West Point mill, which embodies
the historic roots of our Company, was an extremely difficult
one. After thoroughly re-examining our Vision 2000 strategy,
however, management and the Board of Directors have concluded
that a sale of the mill and related assets on the terms currently
being discussed would be in the best interest of the Company and
its shareholders.
"This deal is positive for both parties," said Mr. Fox, "as it is
consistent with the strategies of each company. When the sale of
the West Point mill and related assets is completed, Chesapeake
will be a highly focused, growth-oriented company with reduced
capital intensity and cyclicality; our focus will be on our
specialty packaging and recycled tissue businesses, in which we
hold significant market shares.
"In our packaging business," Mr. Fox explained, "we will
emphasize growth in specialty packaging, including point-of-sale
display areas, where we offer our customers a product partnership
that provides a total merchandising solution and a commitment to
global expansion.
"In our recycled tissue business," Mr. Fox continued, "we will
continue to concentrate our efforts on the commercial and
industrial markets where we have an established reputation as a
superior producer and provider of high-quality napkin, tissue and
toweling products for the away-from-home market.
"For St. Laurent," Mr. Fox continued, "the West Point mill and
its related assets are wonderful additions that bolster St.
Laurent's strategy of expanding its presence in the value-
added packaging products market, particularly the white-top
linerboard market. Ownership of this mill and box plants will
contribute to St. Laurent's growth as an integrated player in
white-top and linerboard. The West Point mill has a bright
outlook for growth and resources as part of a company that is
focusing its capital and management resources on the kraft
products business. The West Point mill would be a major
component of St. Laurent's operations and its growth strategy;
this role should benefit the mill's employees, customers,
suppliers and the entire West Point community."
The four box plants involved in the transaction are located in
Richmond, VA; Roanoke, VA; Baltimore, MD; and North Tonawanda,
NY. The total operations to be sold employ approximately 1,750
people. The annual manufacturing capacity of the West Point mill
is about 960,000 tons of kraft pulp and paper products.
The anticipated sale price of approximately $508 million would
consist of at least $425 million in cash and up to $75 million of
St. Laurent common stock. St. Laurent would also assume
approximately $8 million of tax-exempt debt.
Mr. Fox concluded, "Funds received from the transaction will be
used to reduce debt, expandthe Company's stock repurchase program
and finance growth opportunities internally and through
acquisitions."
Certain terms of the proposed transaction are still in
negotiation. Consummation of the proposed transaction with St.
Laurent is contingent on final negotiation and execution of a
definitive purchase agreement; due diligence; approval of both
companies' boards of directors; and the successful completion of
St. Laurent's financing initiatives, as well as other customary
conditions to closing, including regulatory approvals.
Closing of the proposed sale is expected in early May.
