Chesapeake Corp. (fka CSKEQ)

[blukky]

Chesapeake Corporation Reaches Agreement to Sell All of Its Business Operations As a Going Concern to Affiliates of Irv

Chesapeake Corporation Reaches Agreement to Sell All of Its Business Operations As a Going Concern to
Affiliates of Irving Place Capital Management, L.P. and Oaktree Capital Management, L.P.

Mon Dec 29 21:15:00 2008
EST
RICHMOND, Va., Dec 29, 2008 /PRNewswire-FirstCall via COMTEX News Network/ --
Parent Company and U.S. Operating Subsidiaries File Voluntary Chapter 11 Petitions
in U.S. To Consummate Sale
All Global Manufacturing and Distribution Facilities Operating As Usual
Obtains Commitment For Up To $37 Million in DIP Financing To Fund Operations
Chesapeake Corporation (Other OTC: CSKE) today announced that it has reached
an agreement to sell all of its operating businesses to a group of investors including
affiliates of Irving Place Capital Management, L.P. and Oaktree Capital Management,
L.P., who intend to continue operating these businesses as a going concern. To consummate
this sale, Chesapeake Corporation and its U.S. operating subsidiaries filed voluntary
Chapter 11 petitions today in the Eastern District of Virginia in Richmond.
All of the Company's operations - including all of its manufacturing and
distribution facilities in the U.S. and around the world - are open and operating
on normal schedules, fulfilling customer orders as usual and providing uninterrupted
customer service. The Company's non-U.S. subsidiaries were not included in the Chapter
11 filing and there are no plans to place them in administration.
"After exploring a range of possible alternatives to improve our balance
sheet and maintain the liquidity we need to operate our businesses in an extremely
difficult economic environment, the management and Board of Directors of Chesapeake
concluded that a court-supervised sale of our business operations is in the best
interest of the Company and its stakeholders," said Andrew J. Kohut, President and
Chief Executive Officer of Chesapeake Corporation. "In particular, the sale transaction
and Chapter 11 process will help us meet several critical objectives, including
allowing ongoing operation of all of our businesses without interruption to supplier
and customer relationships, providing a permanent solution to the high leverage
at the parent company level and constrained liquidity, providing the most rapid
path to a new organization with a much healthier balance sheet, and providing a
bright future for our operating companies and their employees, customers and suppliers."
Chesapeake has filed a variety of first day motions with the Court that will
allow it to continue to conduct business as usual while it completes the sale of
the business operations to the investor group. In addition, the Company will seek
preliminary approval from the Court for a new debtor-in-possession financing facility
of up to $37 million provided by certain members of its current revolving lender
group. The new facility will provide an immediate source of funds to the Company,
enabling it to satisfy customary obligations associated with ongoing operations
of its business, including the timely payment of employee obligations, materials
purchases, normal operating expenses and other obligations. Availability under the
debtor-in-possession financing is initially limited to $18.55 million, subject to
increase (i) upon entry of an order in the Company's Chapter 11 case approving the
new facility and (ii) the unanimous approval of the lenders under the new facility.
The Company expects that cash flows from the ongoing business and the initial availability
under the new facility will allow it to meet its liquidity needs until such time
as the conditions are satisfied for the availability of increased financing.
Under terms of the transaction, the investor group will purchase substantially
all of the assets of the U.S. operating subsidiaries of Chesapeake Corporation and
the outstanding capital stock or other equity securities of Chesapeake's foreign
subsidiaries. The proposed aggregate purchase price is $485 million, with cash proceeds
to be paid to the seller to be reduced by amounts in respect of certain pension
and severance obligations of the Company and its subsidiaries, amounts outstanding
as of closing under the Company's Senior Secured Credit Facility and certain other
fees and obligations. The definitive Asset Purchase Agreement with respect to the
proposed transaction between the Company and the investor group was filed with the
Court today.
The transaction is subject to the approval of the Bankruptcy Court under
Section 363(b) of the U.S. Bankruptcy Code and the satisfaction of specified closing
conditions, including the purchasers reaching definitive agreement on exit financing.
Following the completion of a court-supervised competitive auction process, a final
sale hearing and closing are anticipated to take place during the first quarter
of 2009.
The Company's financial advisor is Goldman Sachs & Co., its restructuring
advisor is Alvarez & Marsal, and its legal advisor in the U.S. is Hunton &
Williams LLP.
Information about the proposed sale and Chesapeake's Chapter 11 proceedings
and the proposed related transaction is available on the Company's website at www.chesapeakecorp.com.

Information about the claims process and court filings can be accessed at www.kccllc.net/chesapeake.
General information for vendors who have provided goods or services to the U.S.
business is also available at 1-888-830-4660. General information for U.S. retirees
is also available at 1-888-830-4660. Inquiries can be sent by email to [e-mail].
Chesapeake Corporation protects and promotes the world's great brands as
a leading international supplier of value-added specialty paperboard and plastic
packaging. Headquartered in Richmond, Va., the Company is one of Europe's premier
suppliers of folding cartons, leaflets and labels, as well as plastic packaging
for niche markets. Chesapeake has 44 locations in Europe, North America, Africa
and Asia and employs approximately 5,400 people worldwide.
This news release, including the comments by Andrew J. Kohut, contains forward-looking
statements that are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The accuracy of such statements is subject to a number
of risks, uncertainties and assumptions that may cause Chesapeake's actual results
to differ materially from those expressed in the forward-looking statements including,
but not limited to: approvals by the U.S. Bankruptcy Court of the company's proposed
plans for reorganization, including approval of the proposed sale of the company's
operating businesses; satisfaction of specified closing conditions for the proposed
sale, including the purchasers obtaining financing for the transaction; the company's
ability to remain in compliance with the covenants set forth in the debtor-in-possession
credit facility, and its ability to satisfy the conditions to increasing the available
borrowings under such facility; the company's inability to realize the full extent
of the expected savings or benefits from restructuring or cost savings initiatives,
and to complete such activities in accordance with their planned timetables and
within their expected cost ranges; the effects of competitive products and pricing;
changes in production costs, particularly for raw materials such as folding carton
and plastics materials, and the ability to pass through increases in raw material
costs to customers; fluctuations in demand; possible recessionary trends in U.S.
and global economies; changes in governmental policies and regulations; changes
in interest rates and credit availability; changes in actuarial assumptions related
to pension and postretirement benefits plans; changes in liabilities and cash funding
obligations associated with the company's defined benefit pension plans; fluctuations
in foreign currency exchange rates; and other risks that are detailed from time
to time in reports filed by Chesapeake with the Securities and Exchange Commission.
SOURCE Chesapeake Corporation
http://www.chesapeakecorp.com
Copyright (C) 2008 PR Newswire. All rights reserved

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