Graham Packaging's $100 million notes due 2008 likely to be add-on, more details emerge

By Paul A. Harris

St. Louis, Mo., July 10 - Graham Packaging Co.'s upcoming $100 million of notes due 2008 is likely to be an add-on, according to further details that emerged on the offering Tuesday.

Graham Packaging's deal, to be issued with GPC Capital Corp. I, is a $100 million add-on to its 8¾% senior subordinated notes due Jan. 15, 2008 and will be July business, according to the source.

Deutsche Bank Securities Inc. and JP Morgan are joint bookrunners. Goldman Sachs & Co., Lehman Brothers, Morgan Stanley and ABN Amro are co-managers.

The 83/4s of 2008 priced on Jan. 23, 1998 and are callable in 2003 at 104.375. The call declines to 102.917 in 2004, 101.458 in 2005 and to par on Jan. 15, 2006 and thereafter.

In a document filed with the Securities and Exchange Commission the company stated: "To the extent that the principal amount of the notes exceeds the issue price by more than a de minimis amount, they will be issued as a separate series from the existing notes, and as a result the existing notes and the notes offered hereby will trade as separate classes of securities."

The filing also stated: "The notes will be deemed to have been issued with original issue discount to the extent that the principal amount of a note exceeds the issue price of a note by more than a de minimis amount. If the notes are issued with original issue discount, for U.S. federal income tax purposes, the original issue discount will accrue from the issue date of the notes and be includable in your gross income as it accrues, even though no cash payments with respect to the original issue discount will be made until maturity of the notes."

Graham Packaging's recapitalization plan also includes a new senior credit agreement comprised of a $550 million term loan and a $150 million revolver, and an approximately $250 million IPO.

Proceeds will be used to repurchase the $169 million ($155.7 million accreted value) of senior discount notes and repay bank debt.

The issuer is a York, Pa. manufacturer of plastic containers.

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