Statement re amendment to further extend its de...

Statement re amendment to further extend its debt maturities

Smurfit Kappa Group PLC

SKG launches amendment to further extend its debt maturities

8 February 2012: Smurfit Kappa Group plc (“SKG” or the “Group”), one of the world’s largest integrated manufacturers of paper-based packaging products, with operations in Europe and Latin America, today announced that it is seeking the consent of its lenders to amend its Senior Credit Facility Agreement.

Overview

As reported in its 2011 fourth quarter results announcement released today, SKG continues to deliver a strong financial performance. Within the past 12 months, SKG has materially improved its financial profile and flexibility, by reducing net debt by €358 million to €2.75 billion, while maintaining a strong liquidity position and diverse funding sources. To further strengthen its capital structure the Group is now seeking the consent of its lenders to amend its Senior Credit Facility Agreement.

The proposed amendments will further increase SKG’s financial flexibility, providing it with:

• Extended maturity of its Senior Credit Facility
• Increased ability to raise longer-dated capital to refinance a portion of its existing Senior Facilities
• Flexibility to efficiently refinance its Senior Subordinated Notes Due 2015

Lenders under Term Loans B and C who agree to extend will be offered a 20% cash prepayment at par to be funded from cash on balance sheet.

A significant number of the Group’s top lenders have already confirmed their support for all of the proposed amendments and maturity extension.

Smurfit Kappa Group’s Chief Financial Officer, Mr Ian Curley, commented: “In the last 12 months, our strong cash flow generation delivered net debt reduction of €358 million to €2.75 billion, exceeding our stated net debt reduction target. Our net debt to EBITDA ratio reduced to 2.7x at the end of 2011, and our clear objective is to maintain that ratio below 3.0x through the cycle. The proposed amendments to our Senior Credit Facility form part of an ongoing process of efficient capital structure management, and will provide us with an extended debt maturity profile and significantly enhanced financial flexibility.”

Amendments to Senior Credit Facility Agreement | Summary Details

The principal requested amendments to SKG’s Senior Credit Facility Agreement (“SCF”) are:

(i) Extend the maturity of the Group’s existing Term Loan B from December 2013 to June 2016 and the Group’s existing Term Loan C from December 2014 to March 2017. Lenders who choose to extend will be offered a 20% cash prepayment at par

(ii) Extend the maturity of the Group’s Revolving Credit Facilities to June 2016. SKG’s existing Revolving Credit Facilities comprise RCF1 maturing December 2012 and RCF2 maturing December 2013

(iii) Flexibility to issue additional pari passu ranking senior secured bonds, as and when market conditions are considered optimal, to repay SCF debt at par thereby further extending the Group’s average debt maturities and further diversifying its sources of funding. This will be achieved by removing the existing €1 billion limit on the principal amount of senior secured bonds, which was fully utilised in the November 2009 bond issue

(iv) Permit the prepayment, as and when deemed appropriate, of the 2015 Senior Subordinated Notes from the proceeds of new senior secured bonds, from an additional facility under the SCF or from cash on balance sheet, subject to leverage being equal to or less than 3.5 times at the time of prepayment

(v) Permit the use of an additional facility under the SCF to refinance existing tranches under the facility

Subject to the approval of 66 2/3 per cent or more of its lenders to the requested amendments,the Group agrees to:

(a) pay each consenting lender a consent fee of 15 basis points (‘bps’)

(b) in addition to the payment under (a) above, pay each consenting lender extending its Term Loan B and/or its Term Loan C commitment an extension fee of 35bps, based on the amount of such lender’s commitment after the 20% cash prepayment payable to extending lenders has been applied

(c) pay Term Loan B and C extending lenders a margin increase of 50bps at leverage levels above 2.5 times and 37.5bps at leverage levels at or below 2.5 times

(d) in addition to the payment under (a) above, pay each consenting lender extending its RCF1 and/or RCF2 commitment an extension fee of 50bps

(e) pay extending RCF1 and RCF2 lenders a margin increase on drawn amounts of 75bps and 50bps respectively at leverage levels above 2.5 times and 62.5bps and 37.5bps respectively at leverage levels at or below 2.5 times, together with a commitment fee on undrawn amounts of 40% of the drawn margin

Margin increases and commitment fees will take effect immediately upon the requested amendments becoming effective.

A copy of SKG’s letter requesting the consent of its lenders to the proposed amendments to its Senior Credit Facility Agreement is available on the SKG website at www.smurfitkappa.com/investors.

Deutsche Bank, London, is Facility Agent.

About Smurfit Kappa Group

Smurfit Kappa Group is a world leader in paper-based packaging with operations in Europe and Latin America. Smurfit Kappa Group operates in 21 countries in Europe and is the European leader in containerboard, solidboard, corrugated and solidboard packaging and has a key position in several other packaging and paper segments. Smurfit Kappa Group also has a growing base in Eastern Europe and operates in 9 countries in Latin America where it is the only pan-regional operator.

Contacts	Â
Bertrand Paulet Smurfit Kappa Group   Tel: [phone] E-mail: [e-mail]		FTI Consulting     Tel: [phone] E-mail: [e-mail]