MeadWestvaco Corporation announced a definitive agreement to sell its North Charleston, S.C. kraft paper mill and related assets to KapStone Paper and Packaging Corporation for $485 million in cash, subject to certain closing adjustments. KapStone has committed financing for the entire purchase price. Completion of the transaction is expected by the end of the third quarter 2008, and the company plans to use a substantial portion of after-tax proceeds to pay down debt. The company expects to report a modest gain upon completion of the sale.
“MWV’s growth strategy is focused on providing total packaging solutions for customers in growing global consumer products markets,” said John A. Luke, Jr., CEO, MWV. “The North Charleston mill is an industry-leading facility and is well positioned to succeed in its markets, yet it is no longer an optimal fit with our long-term consumer packaging strategy.”
A lumber mill in Summerville, and chip mills located in Elgin, Hampton, Andrews and Kinards, S.C. are included in the sale. At the close of the sale, KapStone will own 100% of Cogen South, LLC, the mill’s on-site cogeneration facility. In 2007, the North Charleston mill produced 833,000 tons of saturating kraft, linerboard, and kraft folding carton board. The approximate 1,100 employees at these facilities will transition to KapStone immediately following the completion of the sale. The company will continue to provide wood fiber for the North Charleston mill through a fiber supply agreement.
Two MWV businesses will remain headquartered in the Charleston area—the specialty chemicals division, which will continue to operate adjacent to and receive raw materials from the mill, and the community development and land management group, which includes the company’s forestland operations. MWV will retain all of the 400,000 acres of forestland it currently owns in South Carolina.