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KapStone Paper planning to continue voluntarily prepaying debt
By Jennifer Lanning Drey
Portland, Ore., Nov. 5 - KapStone Paper and Packaging Corp. plans to make additional voluntary debt prepayments as its operations continue to generate cash, Andrea Tarbox, chief financial officer of KapStone, said Thursday during its third-quarter earnings conference call.
The company expects to end 2009 with net debt between $150 million and $160 million. The estimate is based on expected fuel tax credit receipts and excludes any funds that may be generated from operations, she said.
KapStone currently has $195 million of total debt after paying down $158 million of debt in the third quarter and an additional $25 million following the close of the period.
For the third quarter, KapStone posted cash provided by operating activities of $61 million. During the period, the company received $82.5 million from exercises of 17 million common stock warrants.
"Given the current economic climate, we will continue to focus on debt reduction, strengthening our balance sheet and financially positioning the company for the future," Tarbox said.
During the question-and-answer portion of the call, KapStone chief executive officer Roger Stone noted that based on its reduced debt levels, the company would be comfortable executing a merger or acquisition if it found one that increased shareholder value.
KapStone posted third-quarter EBITDA of $60.3 million, up from $33.8 million in the comparable period of 2008.
At Sept. 30, KapStone's debt-to-EBITDA ratio was 1.42 to 1.
The company said that while unit sales volume increased in the third quarter versus the prior year, consolidated net sales decreased to $170.3 million. The figure was down from $207.7 million in the year-ago quarter.
Lower selling prices and a less favorable product mix on a higher percentage of linerboard sales reduced revenues.
KapStone is a Northbrook, Ill.-based producer of unbleached kraft paper products and linerboard.
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