Riverwood, Graphic Packaging bank debt to be refinanced, may refinance bonds

By Peter Heap

New York, March 26 - Riverwood Holding, Inc. and Graphic Packaging International Corp. will refinance all their nearly $800 million of bank debt as part of the merger, conduct a change-of-control tender for Graphic Packaging $300 million of bonds and may refinance Riverwood's $900 million of bonds.

The two companies announced Wednesday that they will merge in an all-stock transaction with an enterprise value of $3 billion.

"Obviously, we are going to have to refinance all of the bank debt from both companies," management said on a conference call to discuss the merger.

Riverwood had $612 million of bank debt outstanding at Sept. 30, 2002, according to its most recent 10-Q filing with the Securities and Exchange Commission. The borrowings include $584 million of term loans and $28 million outstanding under the revolver.

Graphic Packaging had $173.25 million of term loans outstanding at Dec. 31, 2002, according to its most recent 10-K filing.

As far as the company's bonds are concerned, executives told the conference call that their plans will depend on market conditions.

As far as Graphic Packaging is concerned, the merger triggers the change-of-control provision, requiring the company to tender for the securities at 101.

"Obviously, we don't know what their intentions are at this point," management said. "So we can't really comment in terms of what we maybe or not be doing with those bonds."

As far as Riverwood is concerned, its bonds are callable and carry coupons at rates that are higher than where market rates are, the company said.

"So we will certainly be looking at the refinance ability of those bonds and see what the current environment is at the time of closing," management told conference call listeners.

Riverwood had $400 million of 10 7/8% senior subordinated notes due 2008, $250 million of 10 5/8% notes due 2007 and a further $250 million of 10 5/8% notes due 2007 outstanding at Sept. 28, 2002, according to the 10-Q.

Graphic Packaging had $300 million of 8 5/8% senior subordinated notes due 2012 outstanding as of Dec. 31, 2002, according to its 10-K.

Credit Suisse First Boston acted as financial adviser to Graphic Packaging and Goldman, Sachs & Co. acted as financial adviser to Riverwood.

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