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): October 27, 1997
Stone Container Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-3439 36-2041256
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
150 North Michigan Avenue, Chicago, Illinois 60601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (312) 346-6600
N/A
(Former name or former address, if changed since last report.)
Item 5. Other Events
On October 27, 1997, Stone Container Corporation (the
"Company") issued a press release announcing its intention, among
other things, to sell Stone Container (Canada), Inc. and monetize
its remaining pulp assets. Proceeds from these transactions, if
consummated, will be used to repay indebtedness. The press
release is attached as Exhibit 99 hereto and is incorporated by
reference herein.
Item 7. Financial Statements and Exhibits
(c) Exhibits
The exhibits accompanying this report are listed in the
accompanying Exhibit Index.
Pursuant to the requirements of the 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
Leslie T. Lederer
Vice President, Secretary
and Counsel
Date: October 27, 1997
EXHIBIT INDEX
The following exhibit is filed herewith as noted below:
Exhibit No. Exhibit
99 Press release issued by Stone Container
Corporation dated October 27, 1997
TRADED: NYSE: STO
For Further Information Contact:
Randolph C. Read Ira N. Stone
Senior Vice President-- Senior Vice President-
Chief Financial & Chief Marketing,
Planning Officer Communications & Public
(312) 580-4604 Affairs Officer
(312) 580-4608
For Immediate Release:
STONE CONTAINER ANNOUNCES SWEEPING CORPORATE REPOSITIONING
. OVER $1.5 BILLION DEBT REDUCTION
. SALE OF STONE CONTAINER CANADA
INCLUDING: ABITIBI-CONSOLIDATED HOLDINGS
PONTIAC PULP MILL
MacMILLAN-BATHURST JOINT VENTURE
. REMAINING PULP OPERATIONS TO BE MONETIZED
. SALE OR MONETIZATION OF CERTAIN OTHER ASSETS
CHICAGO, October 27, 1997 -- Stone Container Corporation
announced today that its Board of Directors has approved a
sweeping corporate repositioning plan that is anticipated to
result in debt reduction in excess of $1.5 billion. The
Company's plan will involve:
. The sale of Stone Container (Canada) Inc., which assets
include:
. 48.8 million shares of Abitibi-Consolidated Inc.
. the 210,600 tonne per year specialty pulp mill at
Portage-du-Fort ("Pontiac"), Quebec.
. a 50% interest in Canadian corrugated box manufacturer
MacMillan-Bathurst.
. The monetization of Stone's remaining pulp operations.
. The sale or monetization of certain other assets of Stone
Container.
Roger W. Stone, Chairman, President, and Chief Executive Officer
stated: "This repositioning of our Company focuses our
operations exclusively in our unbleached paper and packaging
business, where Stone Container is a world leader. We believe
these transactions will substantially enhance shareholder value
and are in keeping with our commitment to improve our balance
sheet."
Randolph C. Read, Senior Vice President and Chief Financial and
Planning Officer stated, "These innovatively structured sales and
monetizations are intended to provide maximum proceeds available
to reduce debt and move toward our goal of becoming an investment
grade credit. At the same time, the Company will focus its
efforts and energies in developing its unbleached paper and
packaging business, which we believe should provide the basis for
improved returns to our shareholders over the long term."
The repositioning of Stone Container is expected to produce
significant benefits for the Company, including:
. Reduction of indebtedness in excess of $1.5 billion.
. Improvement in the capital structure and debt leverage
ratios of the Company.
. Improvement in cash flow and reported earnings resulting
from reduced interest payments as the result of debt
reduction.
. Anticipated reduction of the magnitude of cyclical earnings
swings of the remaining unbleached business compared with
the Company before the repositioning.
. With a narrowed focus and product mix, the Company should
be able to dedicate additional resources to its remaining
core business.
. The Company believes all these actions combined should
result in incremental shareholder value.
Sale of Stone Container (Canada) Inc.
Stone Container has entered into a letter of intent with CIBC
Wood Gundy Capital, a division of Canadian Imperial Bank of
Commerce, to sell all the issued and outstanding shares of Stone
Container (Canada) Inc. ("Stone Canada"). Upon the successful
completion of the sale, the proceeds therefrom will be used for
debt reduction.
Stone Container will restructure certain of its Canadian holdings
prior to the sale of Stone Canada. As a result, the following
assets will be owned by Stone Canada at the time of the sale:
Abitibi-Consolidated Inc. 48,800,800 shares of common stock of
Abitibi-Consolidated Inc. ("ABY"), which represents approximately
25.2% of the outstanding shares of ABY.
Pontiac Pulp Operations: The specialty hardwood Pontiac pulp
mill located at Portage-du-Fort, Quebec. Pontiac is one of the
world's most technically advanced market pulp mills,
manufacturing high bright, low dirt pulps. The product line of
the mill is primarily photographic pulp, of which it is the
world's largest supplier. The mill has an annual capacity of
210,600 metric tons.
MacMillan-Bathurst: A 50% interest in the corrugated box joint
venture operation in Canada, MacMillan-Bathurst. The remaining
50% interest is owned by MacMillan Bloedel Ltd.
The closing of the sale of Stone Canada is subject to certain
conditions, including the completion of a definitive
purchase/sale agreement, approval of same by each company's Board
of Directors, receipt of a tax ruling and any required
approvals.
Remaining Pulp Operations
Stone Container intends to monetize its remaining pulp assets,
which includes its pulp operations at Panama City, Florida, Port
Wentworth, Georgia, and Bathurst, New Brunswick, Canada, which
operations will be condominiumized with Stone's containerboard
operations at the same sites. The monetization will not include
those containerboard operations. The monetization will also
include Stone's ownership interests in Stone Venepal (Celgar)
Pulp Inc. at Castlegar, British Columbia, Canada. The
monetization of these pulp operations will contribute cash and
securities to Stone Container which will be used for debt
reduction. The Company has developed a plan for monetizing the
pulp operations with its financial advisor on this transaction.
The monetization is subject to various conditions, including
receiving consent from Stone's senior lenders and final approval
of Stone's Board of Directors.
Other Assets
Additionally, the Company is exploring options regarding the sale
or monetization of certain of its other assets.
Strategic Positioning For The Future
With the refined focus of the Company, it will be the intention
of Stone Container to exclusively develop and grow its unbleached
paper and packaging business. Looking forward, the Company plans
to optimize its mill system while increasing product integration.
This should result in higher profits for the Company and less
cyclicality in its earnings swings over the product cycles. The
goal is to become a net buyer of containerboard and paper grades
in the marketplace, while continuing to be a major seller and
exporter in these grades. In addition to its leading North
American position, the Company will look to grow and expand its
international business.
The Company is today the world leader in unbleached paper and
packaging products, including:
. Stone is the world's largest producer of unbleached mill
products.
. Stone is the world's largest converter of corrugated
containers and industrial and retail bags.
. Stone is the world's largest exporter of containerboard.
Mr. Stone commented further that, "A key impetus for
implementing this strategy is to streamline the focus of the
Company on its core business, which consists of its unbleached
paper and packaging operations. Over the long term, we believe
this is the area where we can maximize shareholder value."
Mr. Read commented further, "This planned reduction of
indebtedness of over $1.5 billion, positions Stone Container's
balance sheet as a better capitalized company. Cash flows from
the unbleached packaging side of the business will continue to
represent the bulk of the earnings power of the Company and we
can now focus on expanding this core business in a fundamentally
prudent fashion. It is the intent of the Company to achieve and
maintain an investment grade credit rating."
Stone Container Corporation is the world's largest unbleached
paper and packaging producer. Its product lines include
containerboard, corrugated containers, kraft paper, and paper
bags and sacks.
Headquartered in Chicago, the Company has manufacturing
facilities and sales offices in North America, Europe, Central
and South America, Australia, and Asia.
FORWARD LOOKING STATEMENTS
This press release contains certain forward-looking statements
that involve substantial known and unknown risks and
uncertainties. These forward-looking statements are subject to
numerous risks and uncertainties, certain of which are beyond the
Company's control, including: the impact of general economic
conditions in the U.S. and Canada and in countries in which the
Company and its subsidiaries currently do business; industry
conditions; stock market volatility and market valuations of
companies, including Abitibi-Consolidated Inc.'s stock price; the
negotiation and execution of definitive agreements with respect
to the announced transactions and the final valuations thereof;
and obtaining required approvals of debt holders and regulatory
authorities. The Company's actual results, performance or
achievement could differ materially from those expressed in, or
implied by, these forward-looking statements and, accordingly, no
assurances can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of
them do so, what benefits, including the amount of proceeds, that
the Company will derive therefrom.
