<PAGE>
Exhibit (c)(2)
Strictly private & confidential
--------------------------------------------------------------------------------
Stone Container Corporation
Materials in support of the Fairness Opinion
August 2000
Deutsche Banc Alex. Brown identifies the US investment banking activities of DB
Alex. Brown LLC (formerly BT Alex. Brown Incorporated) and Deutsche Bank
Securities Inc., which are indirect subsidiaries of Deutsche Bank AG.
<PAGE>
The information contained in this presentation regarding Stone Container
Corporation ("Stone Container" or "Stone") was obtained from Stone Container
management and other sources that we believe to be reliable, but has not been
independently verified.
This presentation has been prepared for use of the Board of Directors of Stone
Container only. It is confidential and may not be disclosed or provided to any
third parties without the written permission of Deutsche Bank Securities Inc.
This presentation is prepared as of August 4, 2000 and reflects information made
available to us prior to such date. It does not include information regarding
all of the assessments made by Deutsche Bank Securities Inc. in arriving at its
conclusions.
<PAGE>
<TABLE>
<CAPTION>
Contents
Section
<S> <C> <C>
1 Overview of the transaction 1
2 Historical financial data 7
3 Selected analysis 14
</TABLE>
<PAGE>
Overview of the transaction Section 1
--------------------------------------------------------------------------------
Section 1
Overview of the transaction
1
<PAGE>
Overview of the transaction Section 1
--------------------------------------------------------------------------------
Transaction summary
<TABLE>
<CAPTION>
<C> <S>
Transaction: [_] SCC Merger Co. ("Merger Co.") a wholly owned
subsidiary of Smurfit-Stone Container Corporation
("Smurfit-Stone" or "SSCC") will merge with and into
Stone Container with Stone Container as the
surviving corporation
Preferred stock [_] Each share of Stone Container Series E Preferred
consideration: Stock ("Series E Preferred" or "Series E") shall be
converted into the right to receive
-- one share of Smurfit-Stone Series A Preferred
Stock ("Series A Preferred" or "Series A")
-- an amount of cash equal to the dividends in
arrears ($6.125 per share as of 8/15/00) on the
Series E Preferred Stock less an amount per share
for certain merger-related legal expenses ($0.12
per share)
Key conditions and [_] The affirmative vote of at least two-thirds of the
shareholder agreement: outstanding shares of Stone Container common stock
and Series E Preferred, voting together as a single
class
[_] The affirmative vote of at least two-thirds of the
outstanding shares of the Series E Preferred, voting
as a separate class
Timing: [_] Transaction is expected to be announced on August 11
and the S-4 will be filed concurrently
[_] Closing anticipated shortly after the shareholder
meeting expected to be held in late September or
October
Transaction expenses: [_] Smurfit-Stone and the holders of Series E Preferred,
as a group, each will bear half the legal fees
incurred in connection with the transaction.
Voting agreement: [_] Smurfit-Stone entered into a voting agreement with
Mariner Investment Group Inc., Delta Dividend Group
Inc., Mark Weissman and David Gale, major holders of
the Series E Preferred, to vote in favor of the
merger
</TABLE>
2
<PAGE>
Overview of the transaction Section 1
--------------------------------------------------------------------------------
Preferred stock merger consideration
<TABLE>
<CAPTION> Per Series E preferred share
-------------------------------------------------------------------------------
<S> <C>
Payment of accrued dividends through 8/15/00 $6.125
Less: Estimated share of expenses (0.12)
Estimated cash payment $6.005
Series A preferred shares 1 share
</TABLE>
3
<PAGE>
Overview of the transaction Section 1
--------------------------------------------------------------------------------
Merger structure
[Artwork]
. Newly formed SCC Merger Co. a wholly-owned
subsidiary of Smurfit-Stone
. Consummate merger of SCC Merger Co. into Stone,
with Stone as the surviving entity. Pursuant to
the Merger:
- each outstanding share of Series E Preferred will
be converted into the right to receive one share of
Smurfit-Stone Series A Preferred and a cash payment
in the amount equal to the accrued and unpaid
dividends on such stock less an amount related to
certain merger-related legal expenses
- each outstanding share of SCC Merger Co. will
convert into a share of common stock of Stone.
Issued and outstanding shares of common stock of
Stone at the time of merger will remain outstanding
and be unaffected
. Obtain amendment under JSC (U.S.) credit
agreement to pay dividend and issue intercompany
loan to SSCC to pay Series A preferred dividends in
arrears
- At June 30, 2000, JSC had restricted payments
basket availability of $121 million under its high
yield indentures
4
<PAGE>
Overview of the transaction Section 1
--------------------------------------------------------------------------------
Transaction in context
. The Series E Preferred Shares were issued in February 1992 by the then
publicly held Stone Container
. Dividends were paid until February 15, 1997, after which time continued
payment of dividends would have violated covenants in Stone Container's
borrowing agreements. At June 30, 2000, Stone Container's restricted payment
basket under the 1994 and 1996 Senior Note and 1992 Senior Subordinated Note
Indentures was a negative $1,018 million
. Stone Container was acquired by Smurfit-Stone Container Corporation in
November 1998. The Series E Preferred was left outstanding as part of the
transaction
. In March 1999, two directors were appointed to serve on the board of directors
of Stone Container as representatives of the holders of the Series E Preferred
(the "Representative Directors")
. Beginning in early 2000, the Representative Directors encouraged executives of
SSCC to consider a transaction which would address the dividend arrearage
. Discussions and negotiations relating to the structure and terms of a possible
transaction continued between the Representative Directors and executive
officers of SSCC through August 2000
. A merger agreement, related voting agreements and Preferred Stock Certificates
of Designation have been drafted. Subject to board approval, the merger
agreement will be submitted to Stone Container shareholders for a vote
. The Merger would effect the conversion of the Stone Container Series E
Preferred for Smurfit-Stone Series A Preferred Stock. Smurfit-Stone intends to
pay the dividend on the Series A Preferred through borrowings from its
Jefferson Smurfit Corporation (U.S.) subsidiary
5
<PAGE>
Overview of the transaction Section 1
--------------------------------------------------------------------------------
Series E Preferred and Series A Preferred - summary comparison of terms and
conditions
<TABLE>
<CAPTION>
Series E Preferred Series A Preferred
--------------------------------------------- -------------------------------------------------------------
<S> <C> <C>
Issuer: Stone Container Corporation ("Stone") Smurfit-Stone Container Corporation ("Smurfit-Stone")
Security: Series E Cumulative Convertible Series A Cumulative Exchangeable Redeemable Convertible
Exchangeable Preferred Stock Preferred Stock
Issue: 4.6 million shares at $25.00 per share, 4.6 million shares of Series A Preferred with a liquidation
totaling $115 million preference of $25.00/share
Issue date: 2/92 Upon consummation of the Merger
Dividend: 7 percent or $1.75 per share annual dividend 7 percent or $1.75 per share payable quarterly. Dividends
payable quarterly as declared by the board of the Series A Preferred shall be payable quarterly as
of directors declared by the board and payable in cash unless (a) the
Dividend last paid on 2/15/97. Arrearage as aggregate amount of the dividends would exceed 10 percent
of 8/15/00 is $6.125 per share or $28,175,000 of net income (as defined in the Certificate of
in aggregate Designation), (b) payment of dividends would breach a
credit agreement or debt indenture, or (c) board of directors
have made a determination that Smurfit-Stone does not have
legally available funds. To the extent the dividends are
not paid in cash, they will be payable in additional shares
of Series A Preferred
Conversion rights: Can be converted into 0.729 SSCC common Can be converted into 0.729 SSCC common shares at a
shares at a conversion price of $34.28 per conversion price of $34.28 per common share (SSCC common
common share (SSCC common price $11.25 on price $11.25 on 8/4/00)
8/4/00)
Exchange: At the option of the issuer, convertible At the option of the issuer, convertible to 7 percent
to 7 percent Convertible Subordinated Convertible Subordinated Debentures due February 15, 2012
Debentures due February 15, 2007 at at $25.00 per share
$25.00 per share
Call feature: After 2/15/00 $25.350 per share After 2/15/00 $25.350 per share
2/15/01 $25.175 per share 2/15/01 $25.175 per share
2/15/02 $25.000 per share 2/15/02 $25.000 per share
Mandatory redemption: None February 15, 2012 in cash or in common shares of SSCC
Voting rights: One vote for each share on all matters None, except as may be required by law or in connection
submitted to Stone's stockholders with the modification of the certificate of designation
Entitled to elect two of Stone's directors establishing the Series A Preferred Stock or the indenture
(Stone's board currently includes 5 governing the exchange debenture
members), voting as a separate class,
until Stone declares and pays the
accumulated dividends on the Series E
</TABLE>
6
<PAGE>
Historical financial data Section 2
--------------------------------------------------------------------------------
Section 2
Historical financial data
7
<PAGE>
Historical financial data Section 2
--------------------------------------------------------------------------------
SSCC financial summary overview
<TABLE>
<CAPTION>
($mm, except per ton amounts) Historical financials/(1)/
--------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 LTM 03/31/00 LQ run rate
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Commodity prices ($/ton)
Linerboard $507 $374 $331 $366 $391 $409 $432
Old corrugated containers (OCC) 126 46 76 56 66 75 82
JSC sales $ 4,093.0 $3,410.0 $2,957.0 $3,043.0 $3,295.0 $3,476.0 $3,640.0
STO sales 7,351.2 5,141.8 4,696.0 4,719.0 4,341.0 4,421.0 4,572.0
STL sales 870.0 719.0 691.4 791.9 915.8 999.6 1,128.8
Pro forma combined sales 12,314.2 9,270.8 8,344.4 8,553.9 8,551.8 8,896.6 9,340.8
Growth NA (24.7%) (10.0%) 2.5% 0.0% NA NA
JSC EBITDA 777.0 516.0 303.0 313.0 369.0 402.0 368.0
STO EBITDA/(2)/ 1,231.8 460.2 213.0 215.0 493.0 638.0 844.0
STL EBITDA 249.0 74.0 44.9 76.3 142.1 165.8 179.5
Pro forma combined EBITDA 2,257.8 1,050.2 560.9 604.3 1,004.1 1,205.8 1,391.5
Margin 18.3% 11.3% 6.7% 7.1% 11.7% 13.6% 14.9%
Net income (as reported) 243.0 112.0 1.0 (200.0) 157.0 285.0 160.0
Depreciation and amortization/(3)/ 543.8 504.8 489.2 471.9 497.0 498.6 476.9
Capital expenditures/(3)/ 673.9 419.0 347.0 479.2 213.1 242.2 289.0
</TABLE>
(1) Jefferson Smurfit Corporation merged with Stone Container Corporation on
November 18, 1998 to form SSCC. SSCC acquired St. Laurent ("STL") on
May 31, 2000. Pro forma historical financial ("STL") on May 31, 2000. Pro
forma historical financial results reflect the sum of the actual results
reported by three entities.
(2) Pro forma for the sale of Abitibi-Consolidated.
(3) Depreciation and amortization and capital expenditures are the summation
of the actual number reported for STO, JSC and STL.
8
<PAGE>
Historical financial data Section 2
--------------------------------------------------------------------------------
Stone financial summary overview
<TABLE>
<CAPTION>
Historical combined STO & STL LTM 03/31/00 LQ run rate
------------------------------------------------- -------------------------- --------------------------
Actual Pro forma for Actual Pro forma for
STO the acquisition STO the acquisition
($mm) 1995 1996 1997 1998 1999 alone of St. Laurent alone of St. Laurent
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
STO sales $7,351.2 $5,141.8 $4,696.0 $4,719.0 $4,341.0 $4,421.0 $4,421.0 $4,572.0 $4,572.0
STL sales 870.0 719.0 691.4 791.9 915.8 - 999.6 - 1,128.8
Pro forma
combined sales 8,221.2 5,860.8 5,387.4 5,510.9 5,256.8 4,421.0 5,420.6 4,572.0 5,700.8
Growth NA (28.7%) (8.1%) 2.3% (4.6%) NA NA NA NA
STO EBITDA 1,231.8 460.2 213.0 215.0 493.0 638.0 638.0 844.0 844.0
STL EBITDA 249.0 74.0 44.9 76.3 142.1 - 165.8 - 179.5
Pro forma combined
EBITDA 1,480.8 534.2 257.9 291.3 635.1 638.0 803.8 844.0 1,023.5
Margin 18.0% 9.1% 4.8% 5.3% 12.1% 14.4% 14.8% 18.5% 18.0%
Pro forma EBIT 1,059.0 154.4 (104.3) (46.6) 272.1 350.0 519.6 572.0 749.9
Margin 12.9% 2.6% (1.9%) (0.8%) 5.2% 7.9% 9.6% 12.5% 13.2%
Net income as reported 256.0 (126.0) (418.0) (749.0) (77.0) 16.0 NM 112.0 NM
Depreciation and
amortization/(1)/ 421.8 379.8 362.2 337.9 363.0 288.0 367.6 272.0 356.9
Capital
expenditures/(1)/ 543.9 299.0 181.0 216.2 144.1 98.0 172.2 124.0 217.0
</TABLE>
(1) Depreciation and Amortization and Capital expenditures are the summation of
the actual numbers reported for STO & STL.
9
<PAGE>
Historical financial data Section 2
--------------------------------------------------------------------------------
Comparison of credit statistics
<TABLE>
<CAPTION>
SSCC
--------------------------------------------------------------------------------------------
SSCC alone LTM 3/31/00 LQ run rate
--------------- ----------------------------------- -----------------------------------
Pro forma for the Pro forma for the
acquisition of St. acquisition of St.
1998 1999 Actual - SSCC Laurent Actual - SSCC Laurent
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Pro forma EBITDA/interest 0.8x 1.7x 2.2x 2.2x 2.8x 2.7x
(Pro forma EBITDA - Capex)/interest 0.2 1.4 1.8 1.7 2.4 2.2
Senior secured debt/pro forma EBITDA 6.9 2.3 2.5 2.9 2.2 2.5
Senior debt/pro forma EBITDA 10.6 4.6 3.9 4.0 3.4 3.5
Total debt/pro forma EBITDA 12.5 5.5 4.7 4.6 4.0 4.1
</TABLE>
Note: SSCC's credit statistics are shown pro forma for the merger of Jefferson
Smurfit with Stone Container. The credit statistics that are pro forma for
the acquisition of St. Laurent include $50 million in estimated synergies.
<TABLE>
<CAPTION>
Stone
-----------------------------------------------------------------------------------------
Stone alone LTM 3/31/00 LQ run rate
--------------- ----------------------------------- ---------------------------------
Pro forma for the Pro forma for the
Actual - Stone acquisition of St. Actual - Stone acquisition of St.
1998 1999 alone Laurent alone Laurent
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EBITDA/interest 0.5x 1.5x 2.0x 2.0x 2.6x 2.5x
(EBITDA - capex)/interest 0.1 1.2 1.7 1.6 2.2 2.0
Senior secured debt/EBITDA 9.4 2.6 3.1 3.4 2.3 2.7
Senior debt/EBITDA 14.5 4.8 3.9 4.0 2.9 3.2
Total debt/EBITDA 18.7 6.4 5.1 4.9 3.8 3.9
</TABLE>
10
<PAGE>
Historical financial data Section 2
--------------------------------------------------------------------------------
JSC (U.S.) financial summary overview
<TABLE>
<CAPTION>
Historical financials
--------------------------------------------------------------------------------------------------
($mm) 1995 1996 1997 1998 1999 LTM 03/31/00 LQ run rate
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales $4,093.0 $3,410.0 $2,957.0 $3,043.0 $3,295.0 $3,476.0 $3,640.0
Growth N.A (16.7%) (13.3%) 2.9% 8.3% N.A
JSC EBITDA 777.0 516.0 303.0 313.0 369.0 402.0 368.0
STO/JSC merger synergies(1) 116.7 116.7 116.7 116.7 23.3 16.7 16.7
Pro forma EBITDA 893.7 632.7 419.7 429.7 392.3 418.7 384.7
Margin 21.8% 18.6% 14.2% 14.1% 11.9% 12.0% 10.6%
EBIT 655.0 391.0 176.0 179.0 235.0 271.0 248.0
Margin 16.0% 11.5% 6.0% 5.9% 7.1% 7.8% 6.8%
Net income as reported 243 112 1 (160) 272 307 88
Depreciation and amortization 122.0 125.0 127.0 134.0 134.0 131.0 120.0
Capital expenditures 130.0 120.0 166.0 263.0 69.0 70.0 72.0
</TABLE>
--------------
(1) Assumes that one-third of the merger synergies are captured at Jefferson
Smurfit. SSCC announced that it achieved $280 million in aggregate synergies
during 1999, and that it was on schedule to realize $300 million in 2000.
Synergies of $116.7 million ($350*(1/3)), $23.3 million (($350-280)*(1/3)),
and $16.7 million (($350-300)*(1/3)) have been added to the historical
periods, 1995-1998, 1999, and LTM/LQ Run Rate, respectively to show how the
combined company would have performed.
11
<PAGE>
Historical financial data Section 2
--------------------------------------------------------------------------------
JSC (U.S.) credit statistics
<TABLE>
<CAPTION>
Historical
------------------------------------------
1998 1999 LTM 03/31/00 LQ run rate
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EBITDA/interest 1.6x 2.1x 2.6x 3.4x
(EBITDA - capex)/interest 0.3 1.7 2.1 2.7
Senior secured debt/EBITDA 5.1 1.8 1.7 1.9
Senior debt/EBITDA 8.0 4.2 4.0 4.3
Total debt/EBITDA 8.2 4.4 4.1 4.5
</TABLE>
12
<PAGE>
Historical financial data Section 2
-------------------------------------------------------------------------------
Analysis of selected high yield securities
<TABLE>
<CAPTION>
LTM 3/31/00
----------------------------------------------------------------------------
Stone(1) Smurfit- Gaylord Kappa Norampac Packaging Riverwood
Stone(1) Container Packaging Corp. of International
America
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
EBITDA/interest 2.0x 2.2x 1.3x 2.2x 5.0x 2.8x 1.5x
(EBITDA - capex)/interest 1.6 1.7 1.0 1.3 4.9 2.1 1.2
Debt/EBITDA 4.9 4.6 8.2 4.8 2.0 3.2 6.3
LQ run rate
--------------------------------------------------------------------------------
Stone(1) Smurfit- Gaylord Kappa Norampac Packaging Riverwood
Stone(1) Container Packaging Corp. of International
America
----------------------------------------------------------------------------------------------------------
EBITDA/interest 2.5x 2.7x 1.3x 2.2x 5.8x 3.5x 1.4x
(EBITDA - capex)/interest 2.0 2.2 0.8 1.1 4.9 2.3 1.1
(1) Pro forma for the acquisition of St. Laurent.
</TABLE>
<TABLE>
<CAPTION>
Rating
---------------
Issue Coupon Maturity Moody's S&P Yield to worst
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gaylord Container Corp. Sr. Notes 9.375 06/15/2007 Caa1 B- 13.98
Gaylord Container Corp. Sr. Notes 9.750 06/15/2007 Caa1 B- 13.88
Gaylord Container Corp. Sr. Sub Notes 9.875 02/15/2008 Caa2 CCC+ 19.03
Kappa Beheer BV (Dollar) Sr. Sub Notes 10.625 07/15/2009 B2 B 10.32
Kappa Beheer BV (Euro) Sr. Sub Notes 10.625 07/15/2009 B2 B 10.22
Kappa Beheer BV (Euro) Sr. Sub. Disc. Notes 12.500 07/15/2009 B2 B 11.77
Norampac Inc. Sr. Notes 9.500 02/01/2008 B1 BB 10.08
Packaging Corp of America Sr. Sub Notes 9.625 04/01/2009 B2 B+ 9.66
Riverwood Int'l Sr. Notes 10.250 04/01/2006 B3 B- 11.12
Riverwood Int'l Sr. Notes 10.625 08/01/2007 B3 B- 11.15
Riverwood Int'l Sr. Sub Notes 10.875 04/01/2008 Caa1 CCC+ 13.24
</TABLE>
13
<PAGE>
Selected analysis Section 3
-------------------------------------------------------------------------------
Section 3
Selected analysis
14
<PAGE>
Selected analysis Section 3
--------------------------------------------------------------------------------
Series E Preferred Stock trading performance
Since the merger between JSC and Stone on November 18, 1998, the Series E
Preferred has traded between $14.13 and $23.50
[GRAPH APPEARS HERE]
Daily: 11/19/98 - 8/04/00
Source: Factset.
15
<PAGE>
Selected analysis Section 3
--------------------------------------------------------------------------------
Series E Preferred stock vs. SSCC common stock trading performance
The Series E Preferred Stock price has been closely correlated to the Smurfit-
Stone stock price since the merger
[GRAPH APPEARS HERE]
Daily: November 19, 1998 - August 4, 2000
---Smurfit-Stone Common Share ---Series E Preferred Stock
16
<PAGE>
Selected analysis Section 3
--------------------------------------------------------------------------------
Series E Preferred Stock trading analysis
The sum of the accrued dividends and the conversion value (parity) is nearly as
large as the $15.125 price (as of 8/4/00) of the Series E Preferred
Conversion value $ 8.20
(.729 SSCC) as of 8/4/00
Accrued dividends 6.07
Total $14.27
[GRAPH APPEARS HERE]
Daily: November 19, 1998 - August 4, 2000
---Series E Stock price ---Parity ---Price less Parity ---Price less parity less
accrued dividends
Note: Parity equals to 0.729 multiplied by the Smurfit-Stone common stock
price.
17
<PAGE>
Selected analysis Section 3
--------------------------------------------------------------------------------
Series E summary market statistics
<TABLE>
<CAPTION>
Series E As a % of total
stock price(1) Parity(1)(2) Volume preferred(3)
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stock price as of 8/4/00 $15.125 $ 8.20 2,300 0.05%
1 year high (12/31/99) 23.50 17.91 1,300 0.03
1 year low (8/4/00) 15.125 8.20 2,300 0.05
1 month daily average 16.15 9.19 3,633 0.08
3 month daily average 16.58 9.84 4,207 0.09
6 month daily average 17.20 10.64 4,698 0.10
12 month daily average 19.42 13.30 5,849 0.13
(1) Based on closing price.
(2) Smurfit-Stone common stock price multiplied by the exchange ratio.
(3) Based on 4.6 million shares outstanding.
</TABLE>
Source: Factset.
[_] The only Series E stockholder who owns more than 5 percent of the
outstanding preferred shares is Mariner Investment Partners with 9.9
percent.
18
<PAGE>
Selected analysis Section 3
--------------------------------------------------------------------------------
Equity derivative valuation
The equity derivatives valuation excludes the value of the accrued dividends
. An equity derivatives model values the preferred shares based on the
components of the preferred shares value:
- the dividend and redemption payments
- the conversion option
. The principal assumptions effecting the equity derivative model's valuation
of the preferred include:
- timing of the receipt of the dividends
- volatility in the Smurfit-Stone share price
- discount rate for the expected dividends and liquidation payment
<TABLE>
<CAPTION>
Series E Series A
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Liquidation $25 $25
Conversion feature Convertible into shares of SSCC Convertible into shares of SSCC
Conversion ratio 0.7293 0.7293
Assumptions(1)
Maturity date 100 years 12 years
SSCC share price $11.25 $11.25
SSCC volatility 35% - 45% 35% - 45%
Discount rate 12.7% - 14.7% 12.7% - 14.7%
Theoretical value $14.49 - 16.54 $18.96 - 20.62
</TABLE>
(1) Assumes all Series E and Series A Preferred Stock dividends are paid in
cash on a quarterly basis and that the common shares do not pay a dividend
during the life of the preferreds.
19
<PAGE>
Selected analysis Section 3
--------------------------------------------------------------------------------
Dividend discount model
We have created a number of scenarios related to the timing of cash dividend
payments to compare the relative values of the Series E and the Merger
Consideration
- dividends paid in cash
- cash dividends paid when permitted under borrowing agreements
- no dividends declared prior to redemption
- no cash dividends declared prior to redemption; non-cash dividends declared
on Series A
. We have valued the cash flows as of August 8, 2000 for each of the Series E
and Series A based on various assumptions related to the payment of dividends
and the date of redemption/conversion
. Payment of dividends
- timing of declaration: the board may elect not to declare dividends based
on restrictions imposed under borrowings or for any other reason
- form of dividend: under certain circumstances, the Series A dividends may
be paid in additional Series A shares
- accrued dividends: Series E accrued dividends are assumed to be paid on
the first cash dividend declaration
. Redemption/conversion scenarios
- 2/15/01 at $25.175/share
- 2/15/02 at $25/share
- 2/15/12 at $25/share
- non-redemption in the case of the Series E
- assumes that the value at conversion equals the liquidation value/optional
redemption value
. All scenarios assume that the merger closes on 10/15/00
. All scenarios assume $0.12 per share for certain merger-related legal
expenses
20
<PAGE>
Selected analysis Section 3
--------------------------------------------------------------------------------
Scenario I: All cash dividends
. Series E: begins paying cash dividends with the 2/15/01 dividend payment
. Series A: begins paying cash dividends after the merger is closed
<TABLE>
<CAPTION>
Assumed date of redemption/conversion
-------------------------------------------------------------------------------------------------------------------
02/15/01 02/15/02 02/15/12 Perpetual/2012
-------------------------- --------------------------- --------------------------- -----------------------------
Discount Merger Merger Merger Merger
Rate Series E consideration Series E consideration Series E consideration Series E consideration
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10.0% $30.61 $30.69 $29.85 $29.93 $26.20 $26.29 $23.91 $26.29
12.5 30.25 30.38 29.01 29.13 23.01 23.14 20.34 23.14
15.0 29.91 30.08 28.20 28.38 20.48 20.65 17.94 20.65
17.5 29.57 29.79 27.44 27.66 18.45 18.66 16.21 18.66
20.0 29.25 29.50 26.72 26.98 16.80 17.06 14.89 17.06
Difference Difference Difference Difference
10.0% $ 0.08 $ 0.08 $ 0.08 $ 2.37
12.5 0.13 0.13 0.13 2.79
15.0 0.17 0.17 0.17 2.71
17.5 0.21 0.21 0.21 2.45
20.0 0.26 0.26 0.26 2.16
</TABLE>
21
<PAGE>
Selected Analysis Section 3
--------------------------------------------------------------------------------
Scenario II: Dividends are paid in cash to the extent they are permitted under
borrowing agreements
. Series E: begins paying cash dividends in May 2003 when, based on the
Company's projections, Stone's restricted payment baskets are forecasted to be
positive
. Series A: begins paying cash dividends after the merger is closed
<TABLE>
<CAPTION>
Assumed date of redemption/conversion
-------------------------------------------------------------------------------------------------
02/15/01 02/15/02 02/15/12 Perpetual/2012
---------------------- ---------------------- ---------------------- ----------------------
Discount Series Merger Series Merger Series Merger Series Merger
Rate E consideration E consideration E consideration E consideration
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10.0% $30.61 $30.69 $29.19 $29.93 $24.61 $26.29 $22.32 $26.29
12.5 30.25 30.38 28.21 29.13 21.12 23.14 18.45 23.14
15.0 29.91 30.08 27.28 28.38 18.31 20.65 15.78 20.65
17.5 29.57 29.79 26.40 27.66 16.04 18.66 13.80 18.66
20.0 29.25 29.50 25.57 26.98 14.17 17.06 12.26 17.06
Difference Difference Difference Difference
10.0% $ 0.08 $ 0.74 $ 1.67 $ 3.96
12.5 0.13 0.93 2.02 4.69
15.0 0.17 1.10 2.34 4.87
17.5 0.21 1.26 2.62 4.86
20.0 0.26 1.41 2.89 4.80
</TABLE>
22
<PAGE>
Selected analyis Section 3
--------------------------------------------------------------------------------
Scenario III: No dividends are declared
[_] Series E: no cash dividends are paid
[_] Series A: no cash dividends are paid, no non-cash dividends are paid
<TABLE>
<CAPTION>
Assumed date of redemption/conversion
---------------------------------------------------------------------------------------------------------------------
02/15/01 02/15/02 02/15/12 Perpetual/2012
-------------------------- -------------------------- -------------------------- --------------------------
Discount Merger Merger Merger Merger
Rate Series E consideration Series E consideration Series E consideration Series E consideration
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10.0% $30.61 $30.68 $29.19 $29.79 $17.08 $20.94 - $20.94
12.5 30.25 30.37 28.21 28.96 13.18 17.48 - 17.48
15.0 29.91 30.06 27.28 28.18 10.23 14.86 - 14.86
17.5 29.57 29.77 26.40 27.44 7.98 12.86 - 12.86
20.0 29.25 29.48 25.57 26.73 6.26 11.32 - 11.32
Difference Difference Difference Difference
10.0% $ 0.07 $ 0.60 $ 3.86 $20.94
12.5 0.12 0.76 4.30 17.48
15.0 0.16 0.90 4.63 14.86
17.5 0.20 1.04 4.87 12.86
20.0 0.24 1.16 5.06 11.32
</TABLE>
23
<PAGE>
Selected analysis Section 3
--------------------------------------------------------------------------------
Scenario IV: No cash dividends are paid, but dividends are declared on the
Series A
[_] Series E: no cash dividends are paid
[_] Series A: dividends are declared quarterly and paid in additional Series A
shares, not cash
<TABLE>
<CAPTION>
Assumed date of redemption/conversion
-----------------------------------------------------------------------------------------------------------------------------------
02/15/01 02/15/02 02/15/12 Perpetual/2012
-------------------------- -------------------------- -------------------------- --------------------------
Discount Merger Merger Merger Merger
Rate Series E consideration Series E consideration Series E consideration Series E consideration
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10.0% $30.61 $30.69 $29.19 $29.89 $17.08 $24.41 - $24.41
12.5 30.25 30.37 28.21 29.06 13.18 20.16 - 20.16
15.0 29.91 30.07 27.28 28.27 10.23 16.94 - 16.94
17.5 29.57 29.78 26.40 27.53 7.98 14.48 - 14.48
20.0 29.25 29.49 25.57 26.82 6.26 12.59 - 12.59
Difference Difference Difference Difference
10.0% $ 0.08 $ 0.70 $ 7.33 $24.41
12.5 0.12 0.85 6.98 20.16
15.0 0.16 1.00 6.70 16.94
17.5 0.20 1.13 6.49 14.48
20.0 0.24 1.25 6.33 12.59
</TABLE>
24
<PAGE>
Selected analysis Section 3
--------------------------------------------------------------------------------
The mandatory redemption terms
<TABLE>
<CAPTION>
Smurfit-Stone shares to be issued at the mandatory redemption date
----------------------------------------------------------------------------------------------------------
Equivalent average number of days trading volume
------------------------------------------------
Smurfit-Stone Shares to be issued % of current Since St. Laurent
stock price at redemption (mm) Smurfit-Stone shares July purchase(1) YTD
<S> <C> <C> <C> <C> <C> <C>
At the current share $5 23.0 9% 17 13 11
price, the shares to be 10 11.5 5 8 6 5
issued under the 15 7.7 3 6 4 4
mandatory redemption 20 5.8 2 4 3 3
would approximate 25 4.6 2 3 3 2
4 days of year-to-date 30 3.8 2 3 2 2
trading volume
</TABLE>
(1) Closed on May 31, 2000.
25
