Acquisition financing for Riverwood/Graphic Packaging merger to top $1.5 billion, source says

By Sara Rosenberg

New York, March 27 - The merger of Riverwood Holding Inc. and Graphic Packaging International Corp. is expected to be backed by an acquisition financing package "significantly higher than $1.5 billion", that will include both bank debt and high-yield bonds, a syndicate source told Prospect News on Thursday.

JPMorgan, Deutsche Bank, Goldman Sachs and Morgan Stanley are four equal underwriter leads on the financing, the source said. Citibank and Credit Suisse First Boston are co-leads.

There is "no data yet on tranches or timing" on the bank and bond transactions, the syndicate source added.

On Wednesday, Riverwood and Graphic Packaging announced that a definitive merger agreement has been signed, under which, the two companies will merge in a stock transaction with an enterprise value of approximately $3 billion. The combined company will have 2002 pro forma revenues of about $2.3 billion and EBITDA in excess of $400 million, according to a news release. Management has identified broad-based operating synergies of $55 million per year, which are expected to be fully realized in the third year after closing. The new entity is projected to generate substantial cash flow to reduce debt. The transaction has been approved by the boards of directors of both companies and by the shareholders of Riverwood. The transaction is expected to be completed in the third quarter of this year.

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

Riverwood is an Atlanta provider of paperboard packaging solutions to multinational beverage and consumer products companies. Graphic Packaging is a Golden, Colo. folding carton packaging supplier to the food, beverage and other consumable products markets.

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