ATLANTA (News release) -- Graphic Packaging International, LLC, the primary operating subsidiary of Graphic Packaging Holding Company, announced that it has entered into an agreement for $100 million aggregate principal amount of tax-exempt green bonds due 2061 with a mandatory purchase date of October 1, 2026 (the "Tax-Exempt Green Bonds"). The offering is being executed through the Michigan Strategic Fund ("MSF") Private Activity Bond Program.

The Tax-Exempt Green Bonds will be issued at a price of 110.99 and will bear interest at an annual rate of 4.0%. The equivalent all-in yield will be 1.7%. Interest income received by holders of the bonds will be exempt from federal and Michigan state income taxes but will be subject to alternative minimum tax. Graphic Packaging expects to close the transaction on or about September 29, 2021, subject to customary closing conditions.

The Tax-Exempt Green Bonds will be special, limited obligations of the MSF (as issuer) and will be payable from and secured by a pledge of payments to be made under a Loan Agreement by and between the MSF and Graphic Packaging.

Use of Proceeds

Graphic Packaging estimates that the net proceeds of this offering will be $109.5 million, after deducting the initial purchasers' discount and other transaction related costs. The net proceeds from the offering will be used to reimburse Graphic Packaging for a portion of its estimated $600 million coated recycled board (CRB) platform optimization project (the "Project") that includes the construction of a new CRB machine at its Kalamazoo, Michigan mill. When fully ramped up in 2022, the new machine is expected to annually recycle approximately 500,000 tons of secondary fiber into 500,000 tons of new, finished CRB roll-stock. In addition to the solid waste recycling aspect, Graphic Packaging expects the Project to improve the environmental footprint of its CRB mill system by using up to 300 million fewer gallons of water per year, reducing energy consumption by up to 18% and lowering greenhouse gas emissions by up to 20%.

Designation

The bonds have been designated as Green Bonds because: 1) the proceeds will be used to finance a solid waste disposal/recycling facility; and 2) the Project will promote environmental sustainability through expected reductions in water usage, energy consumption and greenhouse gas emissions.