US PACKAGING giant Chesapeake Corporation plans to sell all its non-US subsidiaries, including its plant in Northern Ireland and four packaging divisions in the Republic, to a group of private equity firms, writes Francess McDonnell
The Virginia-based corporation has filed for voluntary Chapter 11 bankruptcy protection in the US to facilitate the sale.
Chesapeake said the company's non-US subsidiaries were not included in the Chapter 11 filing, and there were no plans to place them in administration.
The group said it has now reached an agreement to sell all of its operating businesses for $485 million to a group of investors. This private equity group includes affiliates of Irving Place Capital Management and Oaktree Capital Management.
It is understood the private equity group intends to continue operating the businesses, 44 in total, as "a going concern".
The new concern is likely to trade as a private business, and the private equity group behind it is believed to be exploring options to locate its new headquarters in Europe. Industry sources say the UK and Ireland are considered as two possible locations for the headquarters.
The non-executive chairman of the board of Chesapeake is Northern Ireland-born David Fell, who is a former chairman of Northern Bank.
Chesapeake's operations outside the US include plants in Asia, Africa and across Europe. It manufactures a range of paper cartons, leaflets, labels and plastic packaging for niche markets.
It has a total of 16 plants in the UK, including a substantial operation in Belfast, which was formerly Boxmore International plc.
In the Republic it operates three paperboard packaging plants in Dublin, Limerick and Westport. It also has a plastic packaging division in Ballyconnell, Co Cavan.
Chesapeake said all of its operations - including its manufacturing and distribution facilities in the US and around the world - were open and operating on normal schedules.
The corporation said it took the decision to file for Chapter 11 in the US and sell all of its remaining operations after "exploring a range of options to improve" its balance sheet.
The packaging giant had been struggling for some time to restructure its finances and had previously confirmed that its liabilities exceeded its assets.
The group recently reported a loss for the nine months to September 28th last of $277.1 million.Chesapeake had previously traded on the New York Stock Exchange but the group was delisted in October.
Andrew J Kohurt, president and chief executive officer of Chesapeake Corporation, believes the sale transaction and the Chapter 11 process should be seen as a positive move for the group.
He said it would provide a "bright future for our operating companies and their employees, customers and suppliers".
