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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): November 18, 1998
STONE CONTAINER CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Delaware 1-03439 65-0654331
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(State or Other Jurisdiction of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
150 North Michigan Avenue
Chicago, Illinois 60601
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(Address of Principal Executive Offices) (Zip Code)
(312) 346-6600
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(Registrant's telephone number, including area code)
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 1. Change in Control of Registrant
(a) Change of Control
(i) Effective November 18, 1998, upon consummation of the merger
(the "Merger") of JSC Acquisition Corporation ("Sub"), a
wholly-owned subsidiary of Smurfit-Stone Container Corporation
("SSCC") (formerly named Jefferson Smurfit Corporation), with
and into the Registrant, SSCC acquired control of the
Registrant from the Registrant's existing public stockholders.
The Registrant was the surviving entity in the Merger, and it
continues its corporate existence as a wholly-owned subsidiary
of SSCC.
(ii) Upon consummation of the Merger, (a) each issued and
outstanding share of the Registrant's common stock, par value
$.01 per share, was converted into 0.99 of a share of SSCC
common stock, par value $.01 per share, (the "SSCC Common
Stock"), with cash being paid in lieu of any fractional
shares of SSCC common stock that would otherwise be issuable;
(b) each share of the Registrant's common stock owned by SSCC
or any of its wholly-owned subsidiaries or held in the
treasury of the Registrant was canceled and retired; (c) each
issued and outstanding share of Stone Series E Preferred
Stock remains outstanding and has become convertible into
SSCC Common Stock, and (d) each issued and outstanding share
of capital stock of Sub shall be converted into and become
1,100,000 shares of the surviving corporation's
(Registrant's) common stock.
(iii) The shares of SSCC Common Stock issued to the Registrant's
common stockholders in the Merger represent approximately 48%
of the outstanding SSCC Common Stock after the Merger.
(iv) SSCC has a 12-person board of directors (the "SSCC Board").
The SSCC Bylaws contain significant provisions regarding the
powers and procedures for nominating directors to the SSCC
Board. The following is a brief summary of certain provisions
of the SSCC Bylaws regarding nominations of directors: The
SSCC Bylaws establish the following three committees of the
SSCC Board in order to nominate persons for election as
directors of SSCC and to fill director vacancies: the Stone
Committee, the Jefferson Smurfit Corporation Committee ("JSC
Committee") and the Morgan Stanley Equity Fund II, Inc.
Committee ("MSLEF Committee")(each, a "Nominating
Committee"). The Stone Committee and the JSC Committee will
continue to function until the earlier of (i) the date Roger
Stone ceases to be chief executive officer of SSCC ("CEO") or
(ii) February 16, 2001, and will thereafter be dissolved. The
MSLEF Committee will continue to function until such time as
Morgan Stanley Equtiy Fund II, Inc. ("MSLEF") beneficially
owns less than the 1,000,000 shares of SSCC Common Stock.
Prior to each meeting of the stockholders at which SSCC
directors are to be elected:
(x) the Stone Committee (which initially will be
comprised of directors nominated by the Registrant)
will have the authority to designate four persons as
nominees for election as directors and, in addition,
one person as nominee both for election as a
director and for appointment as CEO;
(y) the JSC Committee (which initially will be comprised
of directors nominated by Smurfit International B.V.
("SIBV")) will have the authority to designate four
persons as nominees for election as directors and,
in addition, one person as nominee both for election
as a director and for appointment as Chairman of the
SSCC Board (the "Chairman") and one person as
nominee both for election as a director and for
appointment as Executive Vice President ("EVP") of
SSCC; and
(z) the MSLEF Committee (which initially will be
comprised of a director nominated by MSLEF) will
have the authority to designate one person as
nominee for election as a director.
(v) The SSCC Bylaws will provide that at each meeting of
stockholders at which directors are to be elected, the officer
of SSCC presiding at such meeting will nominate, on behalf of
the Nominating Committees (if such committees exist), the
persons designated for nomination by the Nominating
Committees. At any such meeting, neither the SSCC Board nor
any committee thereof will be permitted to nominate or direct
there to be nominated as a director any person not designated
by one of the Nominating Committees.
(vi) Pursuant to a Voting Agreement among SIBV, MSLEF and Roger
Stone, each of the parties thereto has agreed to vote or cause
to be voted all shares of SSCC Common Stock beneficially owned
by such stockholder in favor of (i) the persons designated for
nomination to the SSCC Board by the Nominating Committees and
(ii) Mr. Stone (if Mr. Stone has not been designated for
nomination by any of the Nominating Committees). The
obligation of the parties to vote for Mr. Stone as a director
terminates (i) if Mr. Stone is removed as CEO for cause or
(ii) when Mr. Stone reaches the age of 72.
The descriptions contained in Items 1(a)(iv)-1(a)(vi) above are not
intended to be complete, and are qualified in their entirety by
reference to the summary set forth under the heading "Comparison of
Stockholders Rights" in the Joint Proxy Statement/Prospectus relating
to the Merger, which was filed by SSCC with the Securities and
Exchange Commission on October 8, 1998, as a part of SSCC's
Registration Statement on Form S-4 (File No. 333-65431).
(b) Change of Control Arrangements
There are no present arrangements, to the knowledge of the Registrant,
the operation of which may at a subsequent date result in a change of
control of the Registrant.
ITEM 4. Changes in Registrant's Certifying Accountant.
(a) Previous independent accountants
(i) Effective November 18, 1998, and in connection with the
consummation of the Merger, the Registrant dismissed
PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") as its
independent accountants.
(ii) The reports of PricewaterhouseCoopers on the financial
statements of the Registrant for the past two fiscal years
contained no adverse opinion or disclaimer of opinion and were
not qualified or modified as to uncertainty, audit scope or
accounting principles.
(iii) Effective November 18, 1998, the Registrant's Board of
Directors approved the change in the Registrant's independent
accountants.
(iv) In connection with its audits for the two most recent fiscal
years and through November 18, 1998, there have been no
disagreements with PricewaterhouseCoopers on any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of
PricewaterhouseCoopers, would have caused them to make
reference thereto in their report on the financial statements
for such years.
(v) During the two most recent years and through November 18,
1998, there have been no reportable events (as defined in
Regulation S-K Item 304(a)(1)(v)).
(vi) On November 18, 1998, the Registrant requested that
PricewaterhouseCoopers furnish it with a letter addressed to
the Securities and Exchange Commission stating whether or not
PricewaterhouseCoopers agrees with the statements in this Item
4(a). A copy of such letter dated November 18, 1998, is filed
as Exhibit 16 to this Form 8-K.
(b) New independent accountants
As noted above, in connection with the consummation of the Merger, the
Registrant engaged Ernst & Young LLP ("E&Y") as its independent
accountants to examine and report on the Registrant's financial statements
at and for the year ended December 31, 1998. The engagement of E&Y was
approved by the Registrant's Board of Directors effective November 18,
1998. Prior to the Merger, E&Y were the independent accountants for SSCC.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired
Not applicable.
(b) Pro Forma Financial Information
Not applicable.
(c) Exhibits
Exhibit 16 Letter from PricewaterhouseCoopers LLP pursuant to Item 304 of
Regulation S-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant 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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Name: Leslie T. Lederer
Title: Vice President,
Secretary and Counsel
Date: November 18, 1998
EXHIBIT INDEX
Sequential
Exhibit No. Description Page No.
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16 Letter from PricewaterhouseCoopers LLP pursuant to
Item 304 of Regulation S-K.
EXHIBIT 16
[PricewaterhouseCoopers LLP Letterhead]
November 18, 1998
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We have read the Current Report on Form 8-K of Stone Container Corporation dated
November 18, 1998 and are in agreement with the statements contained in Item
4(a) therein.
Yours very truly,
/s/ PricewaterhouseCoopers LLP
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PricewaterhouseCoopers LLP
