Appleton repurchases nearly $25 million of notes in 2007, looks to sell Bemrose business in 2008

By Jennifer Lanning Drey

Portland, Ore., March 11 - Appleton Papers Inc. repurchased $12.1 million of its 8 1/8% senior notes due June 15, 2011 and the remaining $7.0 million of its 12½% senior subordinated notes due Dec. 15, 2008 during the fourth quarter, Thomas J. Ferree, the company's chief financial officer, reported Tuesday.

In total, Appleton repurchased nearly $25 million of its senior and senior subordinated notes during 2007, Ferree said during Appleton's fourth-quarter earnings conference call.

Appleton does not have specific plans to repurchase additional debt in the open market in the near term, Ferree said in response to a question posed after management's formal remarks.

The company is "cautiously holding onto cash" because of its ongoing expansion plan for its West Carrollton, Ohio, plant and due to the general market uncertainty, he added.

During 2007, Appleton invested $31.5 million in the West Carrollton expansion project. Through the $125 million project, Appleton expects to improve its product design and quality and to increase its capacity to satisfy projected demand for thermal products.

The expansion project is expected to continue through the second half of 2008 and is funded with a combination of cash flow from operations, borrowings under the company's revolving credit facility and special financing from the state of Ohio.

At Dec. 29, Appleton had total debt of $544.2 million, compared with $531.3 million at the end of 2006. Cash and cash equivalents were $44.8 million, up from $20.0 million.

Appleton's net sales from continuing operations for the fourth quarter increased by 2.1% to $240.9 million, compared with net sales from continuing operations of $236.0 million for the same quarter of 2006. Net sales for full-year 2007 were down by 1.1% from 2006.

Bemrose to be sold

Appleton also said it has committed to a formal plan to sell Bemrose, its secured and specialized print services business in Derby, England. The company has begun marketing Bemrose and expects to close on a transaction in the first half of the year.

The company has not determined how it will use the proceeds, but Ferree said a portion is likely to go toward the West Carrollton project.

Appleton is an Appleton, Wis., manufacturer and distributor of specialty paper products.

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