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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): June 28, 1996
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Stone Container Corporation
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(Exact name of registrant as specified in its charter)
Delaware 1-3439 36-2041256
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
150 North Michigan Avenue, Chicago, Illinois 60601
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(Address of principal executive offices) (Zip code)
Registrant's telephone number,
including area code: (312) 346-6600
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N/A
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
RESULTS OF OPERATIONS
The Company expects to report a loss for the quarter ending June 30, 1996
within the range of industry analysts' expectations as reported by I/B/E/S. The
loss reflects the decline in prices for the majority of the Company's products
that has occurred in the second quarter resulting primarily from sluggish demand
and the resulting relatively high industry inventory levels. In an effort to
prevent excessive increases in inventory, the Company has taken downtime at
various of its mills in the second quarter of 1996.
CELGAR PULP MILL
The Company's 90% owned subsidiary, Stone Venepal (Celgar) Pulp, Inc.
("SVCPI"), which owns a 50% interest in the Celgar pulp mill located in
Castlegar, British Columbia, has incurred approximately $375 million (Canadian)
in loans (non-recourse to the Company) from certain bank lenders to finance a
portion of the Celgar pulp mill expansion in 1991. CITIC BC, the owner of the
remaining 50% interest in the mill, has also borrowed a like amount of funds to
finance the remaining portion of the Celgar expansion. Each loan is
collateralized by 100% of the Celgar mill.
In June of 1996, CITIC BC was late in making certain of its interest
payments to its lenders. In the event that CITIC BC does not timely cure such
default, the lenders may accelerate CITIC BC's loan. In such event, SVCPI would
have the right to cure CITIC BC's default and maintain CITIC BC's loan in good
standing, thus continuing SVCPI's interest in the mill.
SVCPI and CITIC BC are considering with the lenders restructuring plans for
the loans as a result of the pulp mill's poor operating results which are
reflective of the recent weak conditions in the pulp market, although at this
time no determination as to any terms of a restructuring have been made.
RECENT TRANSACTIONS
On May 20, 1996, the Company and Gaylord Container Corporation announced
that they have signed a letter of intent to form a new joint venture company, to
be called S&G Packaging Company LLC, to operate their combined retail packaging
businesses. The new company would be a leading producer of paper grocery bags
and sacks, handle sacks and variety bags, with sales in excess of $300 million
and would serve supermarkets, quick service restaurants, paper distributors and
non-food mass merchandisers throughout North America and the Caribbean. The
transaction is subject to completion and execution of a mutually acceptable
definitive agreement and the consent of the Company's Credit Agreement lenders.
On May 30, 1996, the Company consummated its previously announced joint
venture agreement with Four M Corporation (Box USA) ("Four M") for the purchase
of the paperboard mill located in Port St. Joe, Florida, from St. Joe Paper
Company for $185 million plus applicable working capital. The Company made a
50% equity investment in Florida Coast Paper Company LLC ("FCPC"), the joint
venture limited liability company organized to acquire the mill. As part of the
transaction, FCPC sold, through a private placement, non-recourse debt of
approximately $165 million. The mill has the capacity to produce approximately
500,000 short tons per year, split almost evenly between mottled white and kraft
linerboard.
RECENT FINANCINGS
In April 1996, the Company issued $33.3 million aggregate principal amount
of tax-exempt, industrial development revenue bonds. The proceeds of the
issuance have been and will be used to acquire, construct and install certain
solid waste disposal components of the Company's containerboard mill facilities
located in Snowflake, Arizona and Port Wentworth, Georgia.
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Pursuant to the requirements of Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STONE CONTAINER CORPORATION
By: /s/ Leslie T. Lederer
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Leslie T. Lederer
Vice President, Secretary
and Counsel
Date: June 28, 1996
