| Item 1.01 | Entry into a Material Definitive Agreement. |
On February 20, 2024, Graphic Packaging International, LLC (the “Company”), a Delaware limited liability company and a wholly-owned subsidiary of Graphic Packaging Holding Company, and Clearwater Paper Corporation, a Delaware corporation (“CLW”), entered into a Purchase Agreement (the “Purchase Agreement), pursuant to which, among other things, the Company agreed to sell its paperboard manufacturing business located in Augusta, Georgia (the “Business”) to CLW in exchange for (i) $700,000,000 in cash consideration (subject to the adjustment as set forth in the Purchase Agreement, the “Purchase Price”) and (ii) the assumption of certain liabilities of the Business as specified in the Purchase Agreement (such transaction, the “Transaction”).
Under the Purchase Agreement, the Company and CLW have made customary representations and warranties to each other and have agreed to customary covenants relating to the Transaction.
The obligation of the parties to consummate the Transaction is subject to customary closing conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. There is no financing condition to the obligations of CLW to consummate the Transaction. CLW is funding the Purchase Price through a combination of cash on hand and committed debt financing. Assuming all of the closing conditions are met, the Company expects the Transaction to be completed in the second quarter of 2024.
The Purchase Agreement contains certain termination rights for each of the parties, including the right of each party to terminate the Purchase Agreement if the Transaction has not been consummated on or before February 20, 2025.
Pursuant to the Purchase Agreement, the parties and/or certain of their affiliates, as applicable, will enter into certain ancillary agreements in connection with the closing the Transaction (the “Closing”) including, among others, a transition services agreement and a supply agreement pursuant to which CLW will provide paperboard to the Company for a period of time.
The foregoing description of the Purchase Agreement and the ancillary agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement and the exhibits thereto, which the Company intends to file as an exhibit to its Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.
The Purchase Agreement, as described above and when filed as an exhibit to a subsequent report, is only intended to provide investors with information regarding its terms. Except for its status as a contractual document that establishes and governs the legal relations between the parties thereto with respect to the transactions described in this Form 8-K, the Purchase Agreement is not intended to be a source of factual, business or operational information about the parties.
The representations, warranties, covenants and agreements made by the parties in the Purchase Agreement were made only for purposes of such agreement and are made as of specific dates. The assertions embodied in those representations and warranties were made for purposes of the Purchase Agreement and are subject to qualifications and limitations agreed to by the respective parties in connection with negotiating the terms of the Purchase Agreement. In addition, certain representations and warranties may be subject to a contractual standard of materiality different from what might be viewed as material to holders of the Company’s securities or may have been used for the purpose of allocating risk between the respective parties rather than establishing matters as facts.
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