EXHIBIT 99.2
GRAPHIC PACKAGING INTERNATIONAL CORPORATION
[GRAPHIC OMITTED]
August 4, 2000
Dear Fellow Shareholder:
This letter is to notify you that Graphic Packaging
International Corporation (the "Company") intends to issue shares of a
new class of convertible preferred stock (the "preferred stock") to The
Grover Coors Trust, an existing shareholder.
The sale of preferred stock is one step in a sequence of
events the Company has been pursuing in order to strengthen its capital
structure. Its current capital structure has a high level of senior
short-term debt including a loan due August 15, 2000, in the amount of
$169 million (the "One Year Loan"). The Company planned to sell several
assets, including its coated recycle board mill in Kalamazoo, Michigan
and apply the proceeds from the sales to pay off the One Year Loan. Due
to market conditions, the Company did not sell the mill.
The $100 million proceeds from the sale of the preferred stock
will be used to pay down the balance of the One Year Loan to
approximately $69 million and the Company is negotiating to extend the
due date on the balance to August 15, 2001.
As part of its plan, the Company is also negotiating to sell a
non-core asset, and has been marketing a $100 million subordinated debt
issue. Any proceeds from asset sales or a subordinated debt issuance
would first be used to repay the remaining $69 million balance on the
One Year Loan and then to reduce outstanding debt under the senior
credit facility.
The purchase of the preferred stock by the Trust is contingent
upon the Company securing the One Year Loan extension to August 2001,
obtaining certain changes to the senior credit facility terms and other
conditions outlined below. The Company expects to satisfy these
conditions and to issue the convertible preferred shares to the Trust
on August 15, 2000.
Under the policies of the New York Stock Exchange, the
issuance of the preferred stock would usually require shareholder
approval; however, the New York Stock Exchange has allowed the
transaction to proceed without shareholder approval pursuant to Section
312.05 of the Listed Companies Manual of the NYSE, which provides for
an exception from shareholder approval when the delay in securing such
approval would jeopardize the financial viability of the Company.
Because of time constraints, the Company sought and received this
exception. The Audit Committee and a Special Committee of the Board of
Directors has approved this exception and the terms of the sale of
Preferred Stock.
GRAPHIC PACKAGING INTERNATIONAL CORPORATION
4455 Table Mountain Drive Golden, Colorado 80403 (303) 215-4600 phone
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The following is a summary of the general terms and conditions
of the proposed transaction.
A. Summary of Proposed Transaction; Dilutive Effect
Series B Transaction. $100,000,000 consisting of 1,000,000
shares of 10% Series B Convertible Preferred Stock ("Preferred Stock")
at $100 per share.
Closing: August 15, 2000 (the "Closing Date").
Dilution of Common Stock. The Preferred Stock is convertible
into shares of the Company's Common Stock at an initial conversion rate
of 125% of the Market Price of Common Stock on the Closing Date.
Accordingly, the issuance of the Preferred Stock could have a dilutive
effect on the economic interests of the existing shareholders. Assuming
the market price of $2.50 as of August 2, 2000, the conversion price
would be $3.125 per share. Upon conversion, the Preferred Stock would
be convertible into 32,000,000 shares of Common Stock, or approximately
52% of the outstanding Common Stock. On an as converted basis, the
Trust would hold approximately 57% of the Company's Common Stock as of
the Closing Date. Other Coors family trusts and members of the Coors
family currently own approximately 38% of the Common Stock and,
assuming conversion of the Preferred Stock, would own 18% of the
outstanding shares at that time. The Market Price will be calculated as
the average market price of common stock over the 5 days immediately
preceding the Closing Date.
B. Summary of Purchase Agreement
Company Representations and Warranties: The Company will make
Customary representations and warranties regarding the Company's
corporate status, financial statements and SEC filings, operations and
other matters, due authorization of the sale of Preferred Stock, and
the absence of any material adverse change to the business, operations
or financial condition of the Company.
Securities Exemption: The sale of Preferred Stock is exempt
from the registration requirements of the Securities Act of 1933, and
will, be subject to transfer restrictions imposed by that Act. However,
the Company has agreed to register the Common Stock issuable upon
conversion of the Preferred Stock for resale in the future.
Conditions of Closing the Transaction:
|X| Receipt of separate opinions that the transaction is fair to the Company
and to the Trust.
|X| Receipt of necessary approvals.
|X| Absence of legal proceedings that would prevent the sale.
|X| Agreements with the lenders under the Revolving Credit and Term Loan
Agreement dated August 2, 1999, as amended, amending the terms satisfactory
to the Company and the Trust; and
|X| Approval of the Audit Committee and the Special Committee of the final
terms and conditions of the Preferred Stock.
Termination of Agreement: The Purchase Agreement can
be terminated by: (1) the mutual written consent of the Trust and the
Company; (2) either the Trust or the Company if the Closing has not
occurred by October 1, 2000, (3) by either the Trust or the Company if
the other materially breaches any representation or warranty, with a
30-day opportunity to cure the breach; or (4) by either the Trust or
the Company if the Series B Transaction is prohibited by or illegal
under any law, regulation or court order.
Fees and Expenses: The Company has agreed to pay all
fees and expenses relating to the sale of the Preferred Stock,
including fees and expenses of the Trust.
C. Terms of the Preferred Stock
Dividends: 10% per annum, cumulative, payable
quarterly commencing on October 1, 2000.
Liquidation Preference: If the Company dissolves and
liquidates its assets, after payment to creditors the holders of the
Preferred Stock will be entitled to receive $100 per share of their
Preferred Stock (plus accrued but unpaid dividends) before payments are
made to the holders of the Company's Common Stock.
Registration Rights: Subject to certain conditions
and restrictions, the holders of the Preferred Stock will have the
right to require the Company to register, at the Company's expense, the
Common Stock into which the Preferred Stock are convertible. In
addition, if the Company proposes to register other shares of its
Common Stock, the holders of the Preferred Stock will have the right to
require the Company to include in that registration the Common Stock
into which the Preferred Stock are convertible, subject again to
certain conditions and restrictions.
Conversion Features: The Preferred Stock will be
convertible into shares of Common Stock upon the election of any holder
of Preferred Stock. Assuming a market price of $2.50 per common share
on the Closing Date, the initial conversion would be one share of
Preferred Stock for every 32 shares of Common Stock, adjusted for stock
splits, stock dividends, reclassifications, other distributions and the
like. In addition, the conversion rate will be subject to anti dilution
provisions.
Voting Rights: The Preferred Stock shall have one
vote for every two shares of underlying stock into which it is
convertible. Assuming the conversion price described above, this would
entitle the Preferred Stock to 16,000,000 votes. If the Company is in
default of its obligation to pay 2 consecutive dividends on the
Preferred Stock, then the holders of the Preferred Stock will have the
right to elect a majority of the Company's directors until that default
is cured. The Preferred Stock also will have the right to vote on
certain extraordinary matters.
Company Redemption Rights: On or after August 15,
2005, subject to certain conditions, the Company will have the right to
redeem the Preferred Stock in whole or in part at $105.00 per share
declining $1.00 per share per year for five years to $100 per share in
2010 and every year thereafter, plus all accumulated and unpaid
dividends to the redemption date.
A copy of the Certificate of Designations of the Preferred
Stock will be filed with the SEC and available on EDGAR.
If you have any questions, please call Investor Relations, at
(720) 497-4728.
GRAPHIC PACKAGING INTERNATIONAL CORPORATION
