SSCC mills to be upgraded

Jefferson Smurfit's US associate company will have to pay around $125 million (€126m) on its pulp mills in order for them to comply with tough new environmental standards expected to take effect shortly.

Smurfit Stone Container Corporation (SSCC) has already shelled out $236 million on two plants in Alabama and Florida in order to upgrade them to Phase One of a new Cluseter Rule which has been introduced by the US Environmental Protection Agency.

Phases Two and Three are expected to cost another $125 million over the next five years. Under the terms of a new takeover plan for the Jefferson Smurfit Group, investors will end up holding SSCC stock directly, as opposed to the Smurfit Group owning 23 per cent of the US paper and packaging giant.

SSCC announced in mid-June that it was raising $400m through a private placing of senior notes. The company estimates that the net proceeds of the offering will be $392 million. It will use the proceeds, together with borrowings of $52 million, to pay $443 million of its term loan debt due in October of next year. It is also changing its bank credit arrangements to help provide $1,300 million of new term loan facilities, according to documents filed with the SEC in the US.

SSCC has some $5 billion in borrowings. If it didn't amend the loan arrangements, it would owe $149 million of principal payments in the rest of 2002, $1.2 billion in principal payments next year and a further $105 million in 2004. This is on top of servicing the loans through interest payments.

Following the reorganisation of the debt, it will still owe a principal repayment of the same amounts in 2002 and 2004, and $789 million next year.