KapStone expects to launch $95 million credit facility in July

By Sara Rosenberg

New York, June 26 - KapStone Kraft Paper Corp. plans to hold a bank meeting sometime in July to launch its proposed $95 million five-year senior secured credit facility, according to a company spokesman.

LaSalle Bank is the lead bank on the deal.

The facility consists of a $35 million revolving credit facility and a $60 million term loan.

Proceeds will be used to help fund KapStone's, a newly formed wholly owned subsidiary of Stone Arcade Acquisition Corp., for the acquisition of International Paper Co.'s kraft paper business and to provide working capital.

Under the acquisition agreement, KapStone will purchase the kraft paper business for $155 million in cash at closing, plus two contingent payments - one up to $35 million and the other up to $25 million - based on KapStone's annual EBITDA during the five years immediately following the acquisition.

The kraft papers business produces about 400,000 tons of kraft papers, used in a variety of end-use products including about 9 million Ride Rite dunnage bags.

The acquisition is expected to close in the third quarter, subject to satisfaction of various closing conditions, including regulatory approval and approval by Stone Arcade shareholders.

Stone Arcade Acquisition is a Northfield, Ill.-based publicly traded special purpose acquisition company founded in August 2005.

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