Chesapeake revealed its decision to sell all 43 of its business operations, including including 16 in the UK and Northern Ireland, to investors including affiliates of Irving Place Capital Management and Oaktree Capital Management on Monday (29 December).
Following the announcement, branded packaging vice president Timothy Whitfield told PrintWeek's sister title, Packaging News, that the sale would give the company "more headroom" to grow and revealed that the company had been forced to overlook growth opportunities in the past.
"Over the last couple of years Chesapeake has been treading water," he said.
In order to facilitate the sale, which is expected to complete in the first quarter of 2009, Chesapeake Corporation and its US operating subsidiaries have filed voluntary Chapter 11 petitions in the Eastern District of Virginia in Richmond.
The company's non-US subsidiaries were not included in the Chapter 11 filings and the company said that it had no plans to place them in administration.
Chesapeake has also sought preliminary approval from the court for a debtor-in-possession financing facility of up to $37m to ensure the continuing operation of the business, during the Chapter 11 process.
President and chief executive of Chesapeake Andrew Kohut said that the sale transaction and Chapter 11 process would help the company "meet several critical objectives", such as allowing the "ongoing operation of all of our businesses" and "providing a permanent solution to the high leverage at the parent company level".
He added that the sale would provide "the most rapid path to a new organisation with a much healthier balance sheet, providing a bright future for Chesapeake's operating companies, their employees, customers and suppliers".
Following the sale it is expected that Chesapeake will become a private business operating under the Chesapeake name with a European headquarters, possibly sited in the UK.
It will continue to be structured in three divisions: pharmaceutical and healthcare, headed by Michael Cheetham; branded products packaging, led by Whitfield; and plastic packaging, which until now has been under the control of Vincent Hockett in the US.
