| Item 2.03. |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
Packaging Corporation of America (the “Company”) expects that it will close the issuance and sale of the Notes (defined below) on August 15, 2025. The information under Item 8.01 is incorporated herein by reference.
On August 11, 2025, the Company priced an offering of $500 million aggregate principal amount of its 5.200% Senior Notes due 2035 (the “Notes”). In connection with the offering, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with BofA Securities, Inc., Mizuho Securities USA LLC and U.S. Bancorp Investments, Inc., as representatives of the several underwriters listed therein (the “Underwriters”), pursuant to which the Company agreed to sell and the Underwriters agreed to purchase the Notes, subject to and upon the terms and conditions set forth therein. A copy of the Underwriting Agreement has been filed as an Exhibit 1.1 to this Current Report and is incorporated herein by reference.
The Notes will be issued under an indenture, dated as of July 21, 2003, between the Company and U.S. Bank Trust Company, National Association, as successor in interest to U.S. Bank National Association, as trustee (the “Indenture”).
Net proceeds from the offering of the Notes, after deducting the underwriting discount and estimated offering expenses, are expected to be approximately $495.1 million. The Company intends to use these net proceeds, together with drawings on its term loan facilities and cash on hand, to finance the acquisition of the containerboard business of Greif, Inc. (the “Greif Acquisition”) and for related transaction fees and expenses.
The Notes will be the Company’s unsecured senior obligations and will mature on August 15, 2035. The Notes will bear interest at a rate of 5.200% per year, payable semi-annually in arrears on February 15 and August 15 of each year, beginning on February 15, 2026.
At any time prior to May 15, 2035 (the “Par Call Date”), the Company may redeem the Notes, in whole or in part, at a redemption price equal to the greater of: (i) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the Notes matured on the Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined in the Indenture) plus 15 basis points less interest accrued to the date of redemption, and (ii) 100% of the principal amount of the Notes to be redeemed, plus, in either case, accrued and unpaid interest thereon to the redemption date.
At any time on or after the Par Call Date, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon, if any, up to the redemption date.
In the event that the Greif Acquisition is not consummated on or before June 30, 2026 (as such date may be extended pursuant to the terms of the definitive agreement relating to the Greif Acquisition (the “Greif Purchase Agreement”)) or the Greif Purchase Agreement is terminated at any time prior thereto, the Company will be required to redeem the Notes, in whole and not in part, for a redemption price equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest to, but excluding, the redemption date.
Upon a “change of control triggering event” (as defined in the Indenture) with respect to the Notes, unless the Company has exercised its option to redeem the Notes, holders of the Notes will have the right to require the Company to repurchase their Notes at a repurchase price equal to 101% of the principal amount of the Notes repurchased plus any accrued and unpaid interest, if any, up to, but not including, the repurchase date.
The Indenture governing the Notes restricts, among other things, the Company and its subsidiaries’ ability to incur additional indebtedness secured by liens, enter into sale and leaseback transactions and to merge or consolidate with any other person or sell, assign, transfer, lease, convey or otherwise dispose of substantially all of the Company’s assets.
