KapStone Paper Gets $1.06 Billion of Loans for Longview Purchase

KapStone Paper and Packaging Corp. obtained $1.06 billion in loans to support its purchase of Longview Fibre Paper and Packaging Inc. from a fund managed by Brookfield Asset Management Inc.

The financing includes a $775 million add-on term loan due in five years that has a provision allowing it to be increased by as much as $300 million, a $250 million, six-year term loan A1 and a $30 million revolving line of credit, the Northbrook, Illinois-based company said today in a regulatory filing.

KapStone is buying the Longview, Washington-based maker of paper used for shipping containers for $1.03 billion in cash, KapStone said in a statement yesterday. Bank of America Corp., Barclays Plc and Wells Fargo & Co. are arranging the deal, which is expected to close this summer.

At closing, KapStone will have debt to earnings before interest, taxes, depreciation and amortization of less than four times, according to the company. Proceeds of the new debt will fund the purchase price and pay transaction costs.

KapStone has a $305.3 million term A loan that comes due in November 2017, according to data compiled by Bloomberg.

In a revolving line of credit, money may be borrowed again once it’s repaid; in a term loan it can’t.

To contact the reporter on this story: Krista Giovacco in New York at kgiovacco1@bloomberg.net.

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net.

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