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KapStone Paper reduces net debt by $286.4 million in 2009
By Jennifer Lanning Drey
Portland, Ore., March 3 - KapStone Paper and Packaging Corp. reduced net debt by$286.4 million in 2009, which included $67.0 million of net debt reduction in the fourth quarter, Andrea Tarbox, chief financial officer of KapStone, said Wednesday during the company's fourth-quarter and year-end earnings conference call.
"Throughout 2009, KapStone worked on transforming its balance sheet. By the end of the year, KapStone emerged as a strong, well-capitalized company with net debt at year-end of $150 million and a debt-to-capitalization ratio of 30%, Tarbox said.
The company reduced net debt in 2009 using cash generated from operating activities, including $165 million from the alternative fuel mixture tax credit.
Also providing cash used to drive down debt was $85 million from warrant exercises and $29 million from the sale of its dunnage bag business, a non-strategic business unit, Tarbox said.
Cash flow from operations was $77.4 million in the fourth quarter and $201.2 million for the full-year.
Since its acquisition of the Charleston operations, KapStone has reduced its debt by about $320 million.
KapStone's leverage ratio of debt to EBITDA is now less than 1.0, Tarbox said.
"With our strong balance sheet, we believe that we are in a strong position to create significant shareholder value," Roger KapStone, chief executive officer of KapStone, said during the call.
In the fourth quarter, KapStone's consolidated net sales decreased to $165.1 million, down from $181.6 million in the same period of 2008.
The company said lower selling prices and less favorable product mix on a higher percentage of export linerboard sales reduced revenues by $39.6 million. The sale of the dunnage bag business in March 2009 accounted for $7.3 million of the change.
KapStone is a Northbrook, Ill.-based producer of unbleached kraft paper products and linerboard.
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