Blackstone Looks for IPO Exit in Graham Packaging (GRM, BX)

Graham Packaging Company Inc. is one of the most recent filings for a private equity-backed initial public offering.  While terms were not given for this IPO, the company listed that it would sell up to $350 million worth of common stock.  The packaging company said that it plans to list on the New York Stock Exchange under the stock symbol “GRM.”  It did not even list any underwriters in the preliminary prospectus, although the company is tied to The Blackstone Group L.P. (NYSE: BX).

Graham designs, manufactures and sells of value-added, custom blow molded plastic containers for branded consumer products as an alternative to traditional packaging materials such as glass, metal and paperboard.  Customers include major consumer product companies, food and beverage producers, and leaders in the household consumer products markets.  The company believes that it holds the number one market share position in North America for hot-fill juices, sports drinks/isotonics, yogurt drinks, liquid fabric care, dish detergents, hair care, skin care and certain other products. In fiscal-2008, about 90% of net sales from continuing operations were realized in these product categories and 86% of sales were in North America.

The company said in the prospectus that it intends to use part of the net proceeds to pay down a portion of term loans: term loan B expires on October 7, 2011 and bears interest at LIBOR plus 2.25%; term loan C expires on April 5, 2014 and carries an interest rate of LIBOR plus 4.25%.   Lastly, it is paying money out to Blackstone and the Graham family members: “The remaining proceeds will be used to make a one-time monitoring fee payment of $_____ million to Blackstone and $_____ million to the Graham Family in connection with the termination of our Monitoring Agreement and to reimburse Blackstone for paying on our behalf historical administrative expenses incurred by us in the amount of $0.8 million.”

JON C. OGG