Clearwater Paper to sell $350 million notes for Cellu Tissue purchase

By Sara Rosenberg

New York, Sept. 16 - Clearwater Paper Corp. plans on issuing $350 million of senior notes to help fund its acquisition of Cellu Tissue Holdings Inc., company officials said in a conference call on Thursday.

Bank of America Merrill Lynch is the lead bank on the deal.

In terms of pricing on the notes, company officials said it's too early to tell, explaining that it will depend on when the bond deal gets to market.

Under the agreement, Clearwater is buying Cellu Tissue for $12 per share in cash. The transaction is valued at $502 million, including equity value of approximately $247 million and net debt of approximately $255 million.

Other funding for the acquisition will come from cash on hand.

In connection with the transaction, Clearwater intends to tender for or defease Cellu Tissue's outstanding 11½% senior secured notes due 2014.

Total debt to adjusted EBITDA will be 2.2 times.

Closing on the transaction is expected in the fourth quarter, subject to stockholder approval, regulatory clearances and other customary conditions.

Clearwater is a Spokane, Wash.-based manufacturer of consumer tissue, bleached paperboard and wood products. Cellu Tissue is an Alpharetta, Ga.-based manufacturer of tissue products.

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