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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): July 19, 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 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 and July of 1996, CITIC BC did not make certain of its interest
and principal payments to its lenders. CITIC BC did not timely cure
all such defaults, and as a result the lenders accelerated CITIC BC's loan.
In addition, in July CITIC BC did not advance cash calls for operating
expenses when required to be made pursuant to the joint venture agreement.
SVCPI has the right to cure CITIC BC's defaults and maintain CITIC BC's loan
in good standing, and currently has elected to do so by paying interest and
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operating expenses, thus continuing SVCPI's interest in the mill.
SVCPI has received funds from the Company to cure CITIC BC's default with
the lenders and to fund CITIC BC's portion of the operating expenses of the
mill.
SVCPI is considering with the lenders and CITIC BC 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
has been made.
RECENT TRANSACTIONS
On May 30, 1996, the Company consummated its previously announced
joint venture agreement with Four M Corporation (Box USA) 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.
On July 12, 1996, the Company and Gaylord Container Corporation
consummated their previously announced agreement 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 is a leading producer of
paper grocery bags and sacks, handle sacks and variety bags, with sales in
excess of $300 million and serves supermarkets, quick service restaurants,
paper distributors and non-food mass merchandisers throughout North America
and the Caribbean.
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: July 19, 1996
