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NEWS RELEASE
Graphic Packaging
4455 Table Mountain Drive, Contact:
Golden, Colorado 80403 Paddy Broughton
Telephone: 303 215 4600 Investor Relations
Fax: 303 273 1571 Tel: 720 497 4728
Graphic Packaging Closes on $100 Million Convertible
Preferred Issue
Golden, Colorado, August 15, 2000: Graphic Packaging
International Corporation (NYSE: GPK), a leading manufacturer of
folding cartons primarily for food and beverage consumer products
companies, reported it has completed the sale of $100 million
convertible preferred stock in a private transaction with the
Grover C. Coors Trust, one of the Coors family trusts and a
current shareholder. The financing was announced on August 2.
Proceeds of the sale were used to reduce the balance of a one-
year term facility of $169 million currently due. The maturity
of the remaining $69 million has been extended by the lending
institutions for 12 months.
Completion of the Company's convertible preferred issue,
extending the maturity on the remainder of the one-year facility
and amendments to its five-year bank facilities are critical
elements in the Company's capital restructuring. These create a
solid capital foundation that will allow Graphic Packaging to
maximize its competitive advantage as a leader in the folding
carton industry. Second quarter results, announced July 31,
indicate that the critical mass created by the 1999 acquisition
of Fort James' packaging operations, which doubled the Company's
size, is leading to improved margins and increased sales.
The Company continues to actively pursue other financing,
including the issuance of subordinated debt and the sale of non-
core assets. Proceeds would first be used to reduce the balance
of the short-term debt and would then be applied against the
Company's five-year debt facilities. Debt reduction will be a
key objective of the Company, with the goal of issuing investment
grade debt to replace the current bank facilities.
Various Coors family trusts and family members together own
approximately 47 percent of the Company's outstanding common
shares. Based on 29.5 million common shares currently
outstanding, conversion would result in about a 62 percent
dilution. On conversion, the Grover C. Coors Trust would own
approximately 66 percent of the outstanding common shares, and
all the family trusts and family members together would own
approximately 80 percent.
Terms of the Convertible Preferred Stock
> One million shares at $100 per share ($100 million), issued
to the Grover C. Coors Trust
> Convertible into common stock anytime at $2.0625 per share
o Conversion price calculated based on 25 percent premium
to the average NYSE closing price for the five trading
days prior to the closing date of August 15, 2000 of
$1.65 per share
o Proportional adjustments to the number of common shares
for stock splits or other changes in the Company's
capital stock
> Redemption by Graphic Packaging permitted after five years
at $105 per share, reducing by $1.00 per share per year for
five years to $100 per share in 2010
o Holders may have the right to require redemption after
2010 if certain conditions are not met
> Quarterly dividend at an annual rate of 10 percent
o Cumulative, with the right to be paid before common
dividends; shares in common dividends on an
as-converted basis
o Right to elect one director to Graphic Packaging's
Board if two dividend payments are in arrears and a
majority of directors if four are in arrears
> Preference on liquidation for the original purchase price,
plus accrued dividends, ahead of common stock and other
capital stock ranking junior to this issue, and partici-
pates on an as-converted basis
> Voting rights: one vote for every two shares of underlying
common stock (24.2 million votes)
One of the conditions of the convertible preferred issue was an
amendment to the terms of the five-year credit facilities, which
has been accomplished. The amendment included revised financial
covenants and amortization schedule, the allowance of preferred
dividends, and extension of the balance of the one-year term
facility to August 2001. As consideration for amending the
terms, the Company agreed to a 25 basis-point increase in the
interest rate and to pay a fee to the lending group.
A special committee of Graphic Packaging, consisting entirely of
independent directors, and the Board approved the sale of
convertible preferred stock after receiving a fairness opinion on
the transaction.
Forward-Looking Statements
Certain statements in this release are forward looking and so
involve uncertainties that may cause actual results to be
materially different from those stated or implied. Specifically,
a) improved margins and increased sales might not continue due to
competitive pressures, and b) the Company might not be successful
in securing additional financing, including selling non-core
assets and securing subordinated debt.
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