The coated and supercalendered papers business includes four paper mills, located in Jay, Maine; Bucksport, Maine; Quinnesec, Michigan; and Sartell, Minnesota, and generated US$1.6bn in sales in 2005. The transaction is expected to be completed in mid-summer 2006, subject to various closing conditions including receipt of financing, regulatory approvals and other customary conditions.
The purchase price consists of approximately US$1.37bn in cash plus approximately $30m in the form of a 10 per cent limited partnership interest in CMP Investments LP, the parent company of CMP Holdings LLC. This interest includes the right to receive certain additional payments contingent upon the buyer’s achievement of certain investment return hurdles.
The transaction is part of IP’s previously announced transformation plan to focus on uncoated papers and industrial and consumer packaging globally. Expected proceeds from divestitures announced to date, including coated papers, are approximately US$9.1bn.
“The coated papers sale agreement is another important step in transforming International Paper to narrow our focus, strengthen our returns and improve value for our shareowners,” says John Faraci, IP chairman and chief executive.
“Our coated papers unit is a good business, with talented leadership, excellent employees, quality brands and an outstanding customer base. This business has been an important contributor to International Paper, and we expect it will continue to thrive under new ownership.”
“We are excited to be purchasing International Paper’s Coated and SC Paper business, an asset with a leadership position in the North American coated papers markets,” says Scott Kleinman, a partner at Apollo Management.
“We view the company as an excellent business and look forward to the opportunity to invest alongside a strong management team with whom we will work to grow the business and realise the full potential of the company’s leading market positions.”
International Paper’s coated and supercalendered papers business annually produces approximately 2m tons of coated freesheet and coated groundwood papers for the magazine, catalogue and retail insert markets. Its brands include Advocate, Influence, Liberty, Savvy, Trilogy and Velocity. The business is headquartered in Memphis, Tennessee and employs approximately 3000 people.
Apollo Management, LP, founded in 1990, is among the most active and successful private investments firms in the United States in terms of both number of investment transactions completed and aggregate dollars invested.
Since its inception, Apollo has managed the investment of an aggregate of approximately US$13bn in equity capital in a wide variety of industries, both domestically and internationally, and is currently managing Apollo Investment Fund VI, LP, its most recent fund with committed capital of $10.1bn.
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