Crown Vantage Completes Sale of New Hampshire Mills to American Tissue Corp. for $45 Million.OAKLAND, Calif.--(BUSINESS WIRE)--July 9, 1999-- Highlights of the Transaction: -- Reduces debt -- Improves liquidity and cash flow -- Eliminates Berlin-Gorham's historical losses -- Focuses management and capital on specialized papers Crown Vantage Inc. (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). BB:CVAN CVAN Attack Aircraft Carrier (Nuclear Propulsion) CVAN CINCPAC Voice Alert/Automated Net ) said today it has completed the sale of its pulp and paper mills in Berlin and Gorham, N.H., to a subsidiary of American Tissue Corp. for approximately $45 million. Crown Vantage will continue to outsource from ATC ATC Air Traffic Control ATC Average Total Cost ATC Certified Athletic Trainer ATC At the Center (Hartford, Maine retreat center) ATC Applied Technology Council ATC All Things Considered the production of its branded printing papers made at the mills under a strategic marketing alliance announced previously. "In evaluating our business opportunities, we determined that the Berlin and Gorham operations were not consistent with our current strategic direction," said Crown Vantage President and Chief Executive Officer Robert A. Olah. "We are now focusing our efforts more intensively on specialized, value-added papers used in printing, publishing and packaging, where we expect our strongest growth, and have exited the market pulp and commodity white papers markets. "This divestiture is in keeping with our strategy to reduce debt and improve cash flow and liquidity. It also allows us to more fully concentrate on the success of our remaining nine mills and to better focus our capital and human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. on continuing the shift from a manufacturing-oriented business to a marketing-driven organization. With the completion of this transaction, we are now reviewing various recapitalization options to further strengthen our financial position," Olah said. The company will apply net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from the sale to pay down debt stemming from its origin as a spin-off company from the former James River James River or Dakota River River in the U.S. rising in central North Dakota and flowing southeast across South Dakota. It joins the Missouri River about 5 mi (8 km) below Yankton after a course of 710 mi (1,140 km). Corporation in 1995. Crown Vantage said it will apply a minimum of $10 million as a permanent reduction to its senior secured term loan with the balance funding reduction in its revolving loan and certain retained liabilities related to the Berlin-Gorham facilities. The revolving commitment from Crown Vantage lenders has not been reduced, resulting in improved liquidity. A $5 million (net) letter of credit will be terminated as part of the transaction and thus available as part of the revolving commitment. Company Anticipates Improved Financial Performance The company said it believes that operating results going forward will be stronger without the New Hampshire New Hampshire, one of the New England states of the NE United States. It is bordered by Massachusetts (S), Vermont, with the Connecticut R. forming the boundary (W), the Canadian province of Quebec (NW), and Maine and a short strip of the Atlantic Ocean (E). operations, based on 1998 pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma data. The combined operations For the department of the British War Office during World War II, see . In the military, combined operations are operations conducted by forces of two or more allied nations acting together for the accomplishment of a single mission. See also
The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $851 million in 1998. However, on a pro forma basis Crown Vantage gross margins without the two mills would have been about 25 percent higher. The company's operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. for 1998 before special charges would have been about $11.5 million, compared to an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $8.3 million on an actual basis. Additional pro forma information will be filed on a Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. within 15 days as required by the Securities and Exchange Commission. "In addition to eliminating the historical losses experienced by these facilities, we will avoid major capital expenditures that would have been required, particularly in the environmental area," Olah said. "We now can refocus management and capital on those operations and market niches that have strategic importance for us. All in all, we believe this is a major step toward regaining profitability for Crown Vantage." The company continues to own and operate nine papermaking facilities in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Scotland with 26 paper machines and a variety of coating, waxing, embossing embossing, process of producing upon various materials designs or patterns in relief by mechanical means. The material is pressed between a pair of dies especially adapted to its hardness and the depth of the design needed. , calendering calendering, a finishing process by which paper, plastics, rubber, or textiles are pressed into sheets and smoothed, glazed, polished, or given a moiré or embossed surface. and sheeting equipment dedicated to producing high value-added specialty papers. Annual manufacturing capacity continues to exceed 750,000 tons of paper. Additionally, Crown Vantage will continue to market and sell about 150,000 tons a year of printing and publishing papers made at the Gorham paper mill for a period of at least three years. To facilitate execution of the ongoing marketing and outsourcing agreement, Crown Vantage will retain a manager on site at Berlin-Gorham. Breaking New Ground With Strategic Marketing Alliance "We're breaking new ground for our industry as we launch our marketing and outsourcing alliance with ATC," Olah said. "That opens the possibility for us to produce and commercialize our brands with even greater flexibility, enhancing our ability to match capacity to the changing needs of the marketplace." Crown Vantage is pursuing an ongoing strategy to increase sales and target-market share by focusing its business in value-added areas. These include its high quality premium printing paper brands such as Graphika!(R), King James(R) Cast Coat, Squire(R) lightweight opaque papers, and the Curtis(R) Collection of text, cover and writing papers. They also include coated groundwood publishing papers for magazines, catalogs and commercial printing, and customized specialty packaging and converting papers that are developed and produced for specific customer end-use products such as coated label papers, disposable medical garments, paper plates, sandwich wrappings, coffee filters and others. Separately, the company said it expects to report improved operating results due to stronger sales volume and improving market conditions when it releases its second quarter results during the fourth week of July. More information about Crown Vantage is available on the Internet at www.crownvantage.com. Forward-Looking Statements as Required by the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 This news release contains certain forward-looking statements concerning Crown Vantage's positioning for the future. As required by the Private Securities Litigation Reform Act of 1995, the company advises that forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those stated or inferred. These could include the failure of Crown Vantage to improve financial results despite the sale of the New Hampshire mills or to maintain liquidity following application of proceeds to its debt and revolving loan. The company may determine that recapitalization of its assets should not be pursued. There is also a risk that the company may not succeed in executing its value-added marketing strategy. Crown Vantage Profile After Sale of New Hampshire Facilities Businesses: Printing and Publishing Papers Specialty Papers Manufacturing Sites: Adams, Mass. Parchment, Port Huron and Ypsilanti, Mich. St. Francisville, La. Milford, N.J. Richmond, Va. St. Andrews and Penicuik, Scotland Paper Manufacturing Capacity: 750,000 tons per year Pulp Manufacturing Capacity: A groundwood pulp mill and a kraft pulp mill at St. Francisville, La., combine to manufacture 350,000 tons per year, used internally for full integration of the St. Francisville paper mill. Strategy: To increase sales and target-market share by focusing its businesses in markets and niches for value-added printing, publishing and specialty papers while continuing to reduce debt and improve liquidity of the corporation. |
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