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KapStone floats price talk on $95 million credit facility
By Sara Rosenberg
New York, June 27 - KapStone Kraft Paper Corp. released price talk on its proposed $95 million senior secured credit facility that is expected to launch with a bank meeting sometime in July.
According to an 8-K filed with the Securities and Exchange Commission, the $35 million revolver is expected to price at Libor plus 150 basis points and the $60 million five-year term loan is expected to price at Libor plus 175 basis points.
LaSalle Bank is the lead bank on the deal.
Proceeds from the term loan and about $10 million of revolver borrowings will be used to help fund KapStone's, a newly formed wholly owned subsidiary of Stone Arcade Acquisition Corp., acquisition of International Paper Co.'s kraft paper business.
Under the acquisition agreement, KapStone will purchase the kraft paper business for $155 million in cash at closing, plus two contingent payments - one up to $35 million and the other up to $25 million - based on KapStone's annual EBITDA during the five years immediately following the acquisition.
The kraft papers business produces about 400,000 tons of kraft papers, used in a variety of end-use products including about 9 million Ride Rite dunnage bags.
The acquisition is expected to close in the third quarter, subject to satisfaction of various closing conditions, including regulatory approval and approval by Stone Arcade shareholders.
Net debt to 2005 EBITDA at the subsidiary level will be less than 2.2x and on a consolidated basis 1.4x.
Stone Arcade Acquisition is a Northfield, Ill.-based publicly traded special purpose acquisition company founded in August 2005.
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