Investor Group to Pay $485 Million for Chesapeake’s Business

Investor Group to Pay $485 Million for Chesapeake’s Business


Dec. 30 (Bloomberg) -- An investor group including Irving Place Capital Management LP will pay $485 million for the business of Chesapeake Corp., the maker of paperboard and plastic packaging that filed for bankruptcy yesterday.

Chesapeake filed its Chapter 11 petition yesterday in U.S. Bankruptcy Court in Richmond, Virginia, the company said in a statement. Chesapeake’s manufacturing and distribution centers in the U.S. and other countries are open and operating normally, according to the statement. Chesapeake units in Europe, Africa and Asia aren’t included in the bankruptcy case, the company said.

The bankruptcy filing “will help us meet several critical objectives, including allowing ongoing operation of all of our businesses without interruption to supplier and customer relationships,” Chesapeake President and Chief Executive Officer Andrew J. Kohut said in the statement.

Chesapeake, whose customers include Coca-Cola Co., Dow Chemical Co. and PepsiCo Inc., has reported three straight years of net losses and has been hurt by environmental cleanup costs, rising raw-material prices and restructuring expenses. The Richmond-based company also lost business from British American Tobacco Plc, and demand has slumped for drug and health-care packaging, Chesapeake said in a U.S. Securities and Exchange Commission filing last month.

The other investor identified in Chesapeake’s statement is Oaktree Capital Management LP. The two groups will pay $485 million for all of Chesapeake’s U.S. units and outstanding shares of its foreign units, according to the statement. The final price will be reduced by some pension and severance obligations, the company said.

Chesapeake spokesman Michael Freitag declined to comment beyond the company’s statement.

Chesapeake fell 1.3 cents, or 17 percent, to 6 cents in over-the-counter trading yesterday before the statement was released.

BLOOMBERG