LAKE FOREST, Ill.--(BUSINESS WIRE)--Oct. 8, 2009--
Packaging Corporation of America (NYSE:PKG) announced today that its
Board of Directors has approved major capital projects at its Counce,
Tennessee and Valdosta, Georgia linerboard mills which will reduce fuel
and electricity purchases at these mills by 50% and 75%, respectively.
The investment will include a new recovery boiler, turbine generator,
and paper machine drying efficiency improvements at the Valdosta mill,
and a rebuild and upgrade of two existing recovery boilers plus a new
turbine generator at the Counce mill. The net capital invested is
expected to be about $215 million, after deducting about $80 million in
maintenance capital that will be avoided on equipment being replaced.
Both the Counce and Valdosta projects are expected to be completed by
the end of 2011. The after tax return on these projects is expected to
be between 20-25% of total capital ($295 million), or 25-30% of net
capital ($215 million). The range of returns is primarily a function of
current, proposed and potential legislation regarding tax incentives and
benefits related to the production of green electricity and energy.
Commenting on the investment, Paul T. Stecko, Chairman and CEO, said
“These projects will significantly reduce our manufacturing costs as
well as reduce the potential impact of escalating fuel and electricity
costs. Upon completion of the projects, our Valdosta mill will burn only
internally generated, wood waste and black liquor in its boilers and
will self-generate 100% of its electricity requirements. Our Counce mill
will lower its purchased electricity requirements by over 60% and lower
purchased fuel consumption by over 35%. We expect essentially all
capital required for these projects to come from cash received from
alternative fuel mix credits, and existing cash on-hand.”
PCA is the fifth largest producer of containerboard and corrugated
packaging products in the United States with sales of $2.4 billion in
2008. PCA operates four paper mills and 68 corrugated product plants in
26 states across the country.
Some of the statements in this press release are forward-looking
statements. Statements that contain words such as “will,” “should,”
“anticipate,” “believe,” “expect,” “intend,” “estimate,” “hope” or
similar expressions, are forward-looking statements. These
forward-looking statements are based on the current expectations of PCA.
Because forward-looking statements involve inherent risks and
uncertainties, the plans, actions and actual results of PCA could differ
materially. Among the factors that could cause plans, actions and
results to differ materially from PCA’s current expectations include the
following: the impact of general economic conditions; containerboard and
corrugated products general industry conditions, including competition,
product demand and product pricing; fluctuations in wood fiber and
recycled fiber costs; fluctuations in purchased energy costs; the
possibility of unplanned outages or interruptions at our principal
facilities; and legislative or regulatory requirements, particularly
concerning environmental matters, as well as those identified under Item
1A. Risk Factors in PCA’s Annual Report on Form 10-K for the year ended
December 31, 2008 filed with the Securities and Exchange Commission and
available at the SEC’s website at “www.sec.gov.”
Source: Packaging Corporation of America
Packaging Corporation of America
Barbara Sessions
INVESTOR
RELATIONS: 877-454-2509
PCA’s Website: www.packagingcorp.com