Chesapeake Corporation to Sell Interest in Georgia-Pacific Tissue Joint Venture(RICHMOND, VA) - Chesapeake Corporation (NYSE:CSK) today announced that it has agreed to sell Chesapeake's 5% interest in Georgia-Pacific Tissue, LLC, a commercial and industrial tissue business, to Georgia-Pacific Corporation (NYSE:GP). Under the terms of the joint venture's operating agreement, Chesapeake's sale of its interest in the business will trigger a payment by Georgia-Pacific to Chesapeake of approximately $235 million for certain indemnifiable deferred tax liabilities, consideration for its 5% ownership interest and its agreement to terminate the joint venture.The total payment from Georgia-Pacific is expected to result in a one-time after tax gain to Chesapeake of approximately $140 million, or $9 per share. A termination of the tissue joint venture on the currently anticipated basis would require income tax payments by Chesapeake of approximately $295 million, payable in quarterly installments during the year 2001. Effective with Chesapeake's fourth quarter 2000 earnings release, which is scheduled for February 2, 2001, the historical results of the Company's former tissue segment will be classified as discontinued operations. Chesapeak's Chairman, President, and Chief Executive Officer, Mr. Thomas H. Johnson commented, "We view the expected sale of Chesapeake's interest in the Georgia-Pacific Tissue joint venture as a very positive outcome for Chesapeake's shareholders. While the joint venture's sale will trigger payment of Chesapeake's deferred tax on the 1999 contribution of Wisconsin Tissue to the joint venture, Georgia-Pacific's payment to Chesapeake will cover the majority of our deferred tax obligation and will generate a substantial one-time gain for Chesapeake." Closing of the transaction is subject to, and is expected to occur simultaneously with, Georgia-Pacific's planned sale of its commercial and industrial tissue business to Svenska Cellulosa Aktiebolage SCA (publ), which was announced earlier today. Chesapeake Corporation, headquartered in Richmond, Va., is a global leader in specialty packaging. Chesapeake is a leading European folding carton, leaflet and label supplier and a leader in plastics packaging for niche markets. Chesapeake has over 75 locations in North America, Europe, Africa and Asia. Chesapeake's net sales in 1999 were $1.2 billion. Chesapeake's website is www.cskcorp.com. # # #
This news release, including comments by Thomas H. Johnson, 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, the ability of the Company to complete the sale of its interest in the tissue joint venture on the currently anticipated terms and other risks that are detailed from time to time in reports filed by the Company with the Securities and Exchange Commission.
|