Orchids Paper Products Company Closes on Agreements With Fabrica de Papel San Francisco, S.A. de C.V.; Enters Into Credit Agreement With U.S. Bank
PRYOR, Okla., June 4, 2014 /PRNewswire/ -- Orchids Paper Products Company ("Orchids") (NYSE MKT: TIS) today announced the closing of the transactions comprising a strategic alliance with Fabrica de Papel San Francisco, S.A. de C.V. ("Fabrica"), as previously discussed in Orchids' press release dated May 5, 2014. This alliance is expected to allow Orchids to effectively and efficiently service customers in the western United States.
Orchids paid an aggregate of $36.7 million under the agreements, consisting of shares of Orchids common stock having a value of $20 million and cash of $16.7 million, which Orchids will fund with a new term loan from U.S. Bank National Association ("U.S. Bank") as discussed below.
"We are excited to begin our partnership with Fabrica," stated Jeffrey Schoen, President and Chief Executive Officer of Orchids. "This alliance is expected to allow us to cost effectively provide high-quality products and superior customer service to a portion of the market that was previously difficult to access. It supports our vision of being recognized as a national supplier of high quality consumer tissue products in the value, premium and ultra-premium tier product categories, and we are confident it will lead to long-term value for our stockholders."
Additionally, Orchids announced its entrance into a credit agreement with U.S. Bank. The $75 million agreement includes a $45 million revolving credit line due June 2019 and a $30 million term loan due June 2020. The agreement has the effect of (i) extending and increasing Orchids' revolving working capital line of credit from $15 million to $25 million, (ii) increasing Orchids' revolving line of credit to include $20 million for the purchase and construction of assets in Oklahoma, and (iii) refinancing and extending Orchids' $10.8 million real estate loan and $7.2 million machinery and equipment loan into a single $30 million term loan, which also provides funding for the $16.7 million to be paid in accordance with the agreements with Fabrica. Borrowings under the agreement will bear interest at variable rates with margins ranging from 1% to 2% above LIBOR.
Please refer to the Orchids Form 8-K filing dated May 5, 2014 for details regarding various agreements of the alliance and the Orchids Form 8-K to be filed with the Securities and Exchange Commission for details regarding the new term loan.
Polsinelli PC represented Orchids and William Blair & Company acted as financial advisors to Orchids on the transactions with Fabrica.
