Tenneco Completes Sale of Containerboard Business

12 April 1999

Tenneco Completes Sale of Containerboard Business to Madison Dearborn Partners

    GREENWICH, Conn.--April 12, 1999--Tenneco today announced that it has completed the sale of its containerboard business to Madison Dearborn Partners for $2.2 billion as the first step in its strategic restructuring. Tenneco received $2 billion in cash and retains a 45 percent equity ownership in the business valued at $200 million. The $2 billion will be used to reduce Tenneco's debt and lease obligations.
    "This sale has multiple benefits for Tenneco shareowners," said Tenneco Chairman and Chief Executive Officer Dana G. Mead. "First, we have received an excellent price for the assets. Moreover, this action creates stronger balance sheets for our automotive and specialty packaging businesses, enabling us to proceed with Tenneco's strategic restructuring, which was begun in 1992, through the most financially attractive alternatives. And finally, our equity position in containerboard allows us to participate in the increased value as industry fundamentals continue to improve."
    The new company, called Packaging Corporation of America (PCA) and based in Lake Forest, Ill., is headed by Paul T. Stecko, chairman and chief executive officer. He formerly served as president and chief operating officer of Tenneco.
    "PCA is one of the most efficient businesses in its industry," said Stecko. "With a highly talented and experienced management team, we intend to continue to build value in this business. The potential is strong, given recent box and containerboard price increases, as well as the lowest inventory levels since July 1995."
    Financing for the transaction included $1.21 billion in senior debt, $550 million in senior subordinated notes and $100 million in preferred stock. Demand for these financing instruments was oversubscribed.
    Prior to this transaction, Tenneco was a $7.6 billion global manufacturing company headquartered in Greenwich, Conn., with 48,000 employees worldwide. Today, Tenneco is a $6 billion company with 40,000 employees. Tenneco Automotive is one of the world's largest producers and marketers of ride control and exhaust systems and products, which are sold under the Monroe(R) and Walker(R) global brand names. Among its products are Sensa-Trac(R) shocks and struts, Rancho(R) shock absorbers, Walker(R) Quiet-Flow(tm) mufflers and DynoMax(tm) performance exhaust products, and Monroe(R) Clevite(tm) vibration control components. Tenneco Packaging is among the world's leading and most diversified packaging companies. Among its products are Hefty(R) trash bags, Hefty OneZip(R) and Baggies(R) food storage bags, E-Z Foil(R) single-use aluminum cookware and Hexacomb(R) paper honeycomb products.
    Madison Dearborn Partners, Inc. is a leading private equity investment firm headquartered in Chicago, Ill., with approximately $4 billion of assets under management. The firm focuses on investments in industries such as natural resources, communications, consumer, health care and financial services.