KapStone Paper and Packaging Corporation announced it completed the purchase of Victory PackagingGolden State Container. Funding for the acquisition came from borrowings under the $1.915 billion amended and restated senior secured credit facility led by Bank of America, Barclays Bank and Well Fargo Bank.
“Today we are welcoming Victory’s team as the newest members of KapStone,” stated Roger W. Stone, chairman and CEO. “The Victory team has grown both revenues and adjusted EBITDA at an impressive 14 percent compounded annual growth over the past four years. Excluding significant new customer wins, the compounded annual growth rate for revenue and adjusted EBITDA has been consistently between five to seven percent. Victory will enhance KapStone’s growth, profitability, cash-flows, and returns to our shareholders.”
The amended facility now consists of Term Loan A-1 of $940 million maturing over five years, Term Loan A-2 of $475 million maturing over seven years with one percent amortization in each of the first six years with the remaining principal due at the end of year seven, and a $500 million revolving credit facility. The initial blended interest rate will be 1.9 percent as determined from the LIBOR-based pricing grid, and the rate is subject to change over the life of the loans as LIBOR rates and KapStone’s debt to EBITDA ratio change.
Headquartered in Northbrook, IL, KapStone Paper and Packaging Corporation is a leading North American producer of containerboard, unbleached kraft paper and corrugated products, and a provider of packaging and logistics solutions. The Company operates four paper mills, 22 converting plants, and more than 65 warehouses and distribution centers located in North America. The business employs approximately 6,000 people.
Investors are cautioned that adjusted EBITDA information contained in this press release is not a financial measure under U.S. generally accepted accounting principles (GAAP). In addition, it should not be construed as an alternative to any other measures of performance determined in accordance with GAAP. This non-GAAP financial measure is provided to enhance the user’s overall understanding of the underlying operating performance of Victory. KapStone believes that this non-GAAP measure provides useful information to investors because it provides for greater transparency to key measures used to evaluate the performance and liquidity of the company. Management uses adjusted EBITDA for evaluating performance against competitors.
Adjusted EBITDA represents earnings before interest, income taxes, depreciation and amortization and certain one-time adjustments. Adjusted EBITDA is not a measure of financial performance under GAAP and should not be considered as an alternative to earnings before income taxes (or any other performance measure under GAAP) as a measure of performance or to cash flows from operating, investing or financing activities as an indicator of cash flows or as a measure of liquidity.
Houston-headquartered Victory is a national distributor of all types of packaging specializing in providing unique solutions employing about 1,500 people.