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GAYLORD FILES PREPACKAGED PLAN WITH APPROVAL OF BONDHOLDERS, BANKS AND EQUITY HOLDERS; FIRST-DAY MOTIONS APPROVED; OCT. 16 CONFIRMATION HEARING

GAYLORD FILES PREPACKAGED PLAN WITH APPROVAL OF BONDHOLDERS, BANKS AND EQUITY HOLDERS; FIRST-DAY MOTIONS APPROVED; OCT. 16 CONFIRMATION HEARING
 DEERFIELD, Ill., Sept. 12 /PRNewswire/ -- Gaylord Container Corporation (AMEX: GCR) announced today that its bondholders, banks and equity holders voted overwhelmingly to accept its prepackaged plan of reorganization.
 During the solicitation period, which expired Sept. 11, 1992, ballots representing approximately 97 percent of the principal amount of subordinated debt voted, 100 percent of the bank debt voted and 99.9 percent of the equity securities voted were cast in favor of the plan. Having obtained the requisite approval of its security holders and banks, the company said it would complete its restructuring by seeking court confirmation of the prepackaged plan. Last evening, the company filed the prepackaged plan in the U.S. Bankruptcy Court for the Eastern District of Louisiana in New Orleans.
 Commenting on the prepackaged plan, Gaylord Chairman and Chief Executive Officer Marvin A. Pomerantz said, "It is important to keep in mind that only holders of the subordinated debt, the banks and the equity holders are affected by Gaylord's prepackaged plan, and the results of the voting demonstrate their strong support for a prepackaged plan filing to complete the financial restructuring. All other classes of creditors, including trade creditors and employees, are unimpaired and, in fact, are treated as if the plan had not been filed."
 At a hearing held this morning, first-day motions were approved that will permit Gaylord to operate with a minimum of disruption and inconvenience to its business during the pendency of the case. Specifically, the company was granted authority to pay prepetition obligations to employees and trade creditors in the ordinary course of business and to maintain all employee salaries, wages and benefit programs as they existed prior to the filing. In addition, an interim order was issued that grants the company immediate access to its cash collateral. The company was authorized to obtain up to $13 million of letters of credit under a new $100 million debtor-in-possession credit facility. A final order on the use of cash collateral and the new credit facility is expected to be issued on Oct. 2, 1992. Hearings have been scheduled on Oct. 16, 1992, to consider approval of Gaylord's disclosure statement and solicitation procedures and to consider confirmation of the prepackaged plan.
 "The company has remained current with its trade creditors throughout the restructuring process. With cash flow from operations, in excess of $50 million of cash on hand and the new $100 million bank credit facility, we have more than sufficient financial resources to continue paying operating expenses and trade creditors under customary terms," Pomerantz said.
 Under the terms of the prepackaged plan, Gaylord's bondholders will exchange their subordinated debt securities for approximately $378 million principal amount of new senior subordinated securities, six million shares of Gaylord Class A common stock and 31.8 million redeemable exchangeable warrants to obtain 31.8 million shares of Class A common stock. The company noted that subordinated bondholders were given the option of receiving the same consideration as they will receive under the prepackaged plan by tendering their securities in an exchange offer that the company conducted simultaneously with the prepackaged plan solicitation. Approximately 89 percent of the subordinated debt was tendered into the exchange offer, which has been terminated.
 "Ninety-five percent of the subordinated debt would have had to be tendered for us to complete the restructuring by means of the exchange offer. Clearly, holders of the subordinated debt opted for the prepackaged plan alternative that binds 100 percent of the bondholders and, therefore, treats all holders equally," said Pomerantz.
 Under the terms of both the exchange offer and the prepackaged plan, in exchange for each $1,000 of principal and accrued and unpaid interest as of Dec. 31, 1991, bondholders have the option of electing to receive either: (I) $400 principal amount of 13-1/2 percent senior subordinated debentures due 2003, 13.1636 shares of Class A common stock and 66.9433 redeemable exchangeable warrants to obtain Class A common stock or (II) $1,000 principal amount of 10-1/4 percent senior subordinated PIK notes due 2001 and 6.8218 warrants. The option elections are subject to proration such that, in the aggregate, 70 percent of the old subordinated debt will be exchanged for Option I and 30 percent will be exchanged for Option II.
 Gaylord Container Corporation is a major national manufacturer and distributor of corrugated containers, containerboard, unbleached kraft paper, multiwall bags and grocery bags and sacks.
 GAYLORD CONTAINER CORPORATION
 Results of Prepackaged Plan Solicitation
 Percent of
 Outstanding Percent Voting
 Class Amount Voted Voted to Accept to Reject
 Bank claims $245 million 100 pct 100 pct 0 pct
 9 holders 100 0
 Subordinated
 debt $496.7 million 85 97 3
 275 holders 84 16
 Class A common
 stock 5,682,692 shares 59 99.8 .2
 Class B common
 stock 5,983,809 shares 100 100 0
 Stock options 1,358,573 shares 99.8 100 0
 -0- 9/12/92
 /CONTACT: Kathryn Chieger of Gaylord, 708-405-5645 or 708-405-5558/
 (GCR) CO: Gaylord Container Corporation ST: Illinois IN: PAP SU: BCY


GK -- NYSA006 -- 8782 09/12/92 16:12 EDT
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Date:Sep 12, 1992
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