Q3 2024 Results and Supplementary Prospectus
01/11/2024 07:00
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RNS Number : 5746K International Paper Company 01 November 2024
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1 November 2024
INTERNATIONAL PAPER COMPANY
PUBLICATION OF THIRD QUARTER 2024 RESULTS AND SUPPLEMENTARY PROSPECTUS
International Paper Company ("International Paper") yesterday published its
unaudited third quarter 2024 financial results (the "Q3 Financial Results")
and held an earnings presentation (the "Earnings Presentation"). Copies of the
press release relating to the Q3 Financial Results, Earnings Presentation and
reconciliation of non-GAAP financial measures are available at
https://www.internationalpaper.com/investors/financial-reports/quarterly-results.
It is expected that International Paper will publish a supplementary
prospectus (the "Supplementary Prospectus") on 4 November 2024, subject to
approval by the Financial Conduct Authority ("FCA"), in respect of, among
other things, the publication of the Q3 Financial Results. The Supplementary
Prospectus will be supplemental to, and should be read in conjunction with,
the prospectus which was published by International Paper on 11 September 2024
in connection with the admission of shares of common stock in the capital of
International Paper to the equity shares (international commercial companies
secondary listing) category of the Official List of the FCA and to trading on
the main market of the London Stock Exchange.
A copy of the Supplementary Prospectus will be made available for inspection
shortly following approval by the FCA and subject to certain restrictions
relating to persons resident in restricted jurisdictions on International
Paper's website at
https://www.internationalpaper.com/uk-listing-prospectus/documentation.
International Paper Q4 Profit Forecast
During the Earnings Presentation, the following statements were made, which
for the purposes of Rule 28.1(a) of the City Code on Takeovers and Mergers
(the "Code") constitutes a profit forecast published by International Paper
during an offer period (the "International Paper Q4 Profit Forecast"):
"Earnings for our Industrial Packaging segment are expected to be higher
sequentially by approximately $55 million, which includes accelerated
depreciation expense of $15 million…We expect Price and Mix to improve
earnings by $45 million sequentially…Volume is expected to decrease earnings
by $15 million…We expect Operations and Costs to increase earnings by $5
million…Lower Maintenance Outage expense is expected to increase earnings by
$21 million. And lastly, lower Input Costs are expected to increase earnings
by $15 million…"
"Earnings for Global Cellulose Fibers are expected to be lower sequentially by
approximately $275 million, which includes accelerated depreciation expense of
$220 million, as well as higher planned maintenance outages…We expect price
and mix to decrease earnings by approximately $25 million…Volume is expected
to be stable…We expect Operations and Costs to increase earnings by approx.
$5 million…Higher planned Maintenance Outage expense is expected to decrease
earnings in the fourth quarter by approx. $36 million. And lastly, Input Costs
are expected to be stable…"
Confirmations
Pursuant to Note 2(b) to Rule 28.1 of the Code, the Panel has granted
International Paper a dispensation from the requirement to include reports
from reporting accountants and International Paper's financial advisers in
relation to the International Paper Q4 Profit Forecast because it was an
ordinary course profit forecast and DS Smith has agreed to the dispensation.
In accordance with Rule 28.1(c)(i) of the Code, the International Paper
Directors confirm that the International Paper Q4 Profit Forecast has been
properly compiled on the basis of the assumptions stated below and that the
basis of accounting used is consistent with International Paper's accounting
policies.
Basis of Preparation
The International Paper Q4 Profit Forecast has been compiled and prepared on a
basis which is both: (a) comparable with International Paper's audited
financial statements for the fiscal years ended 31 December 2023, 31 December
2022 and 31 December 2021; and (b) consistent with the International Paper
Group's accounting policies, which are in accordance with U.S. GAAP.
The International Paper Directors have prepared the International Paper Q4
Profit Forecast based on: (a) the unaudited condensed consolidated financial
information of International Paper as of and for the three months ended 30
September 2024, 30 June 2024 and 31 March 2024; and (b) its internal forecasts
for the three months ending 31 December 2024.
Assumptions
The International Paper Q4 Profit Forecast is based on the assumptions listed
below. Since these principal assumptions are forward-looking, there can be no
assurance that they will individually or in the aggregate prove to be correct,
which may materially change the outcome of the International Paper Group's
results as compared to the International Paper Q4 Profit Forecast.
Factors outside the influence or control of the International Paper Directors
(a) no changes to existing prevailing macroeconomic, regulatory
or political conditions in the markets and regions in which International
Paper operates that would materially affect International Paper;
(b) the inflation and tax and foreign exchange rates in the
markets and regions in which International Paper operates remaining materially
unchanged from the prevailing rates;
(c) no material adverse events that could have a significant
impact on International Paper's financial performance, including litigation,
adverse weather events or natural catastrophes that affect key products,
supply chain or markets or the construction process;
(d) no material changes in market conditions over the forecast
period to 31 December 2024, in relation to either customer demand or
competitive environment;
(e) industry pricing indices remaining materially unchanged from
the prevailing pricing publications at the date of the Supplementary
Prospectus;
(f) no material changes to manufacturing capacity in the market
that would impact the supply and demand for volumes purchased from
International Paper;
(g) no material impact on stakeholder relationships arising from
the Combination;
(h) no material adverse outcome from any ongoing or future
disputes with any customer, competitor, regulator or tax authority;
(i) no material change in International Paper's employee
attrition rates or labor costs, including medical and pension and other
post-retirement benefits driven by external parties or regulations;
(j) no material changes in legislation, taxation, regulatory
requirements, applicable standards or the position of any regulatory bodies
impacting on International Paper's operations or on its accounting policies;
and
(k) no material change to International Paper's ability to
access the global capital markets.
Factors within the influence and control of the International Paper Directors
(a) no material change to the present management of
International Paper prior to 31 December 2024;
(b) no major corporate acquisitions or disposals, developments,
partnership or joint venture agreements being entered into by International
Paper, prior to 31 December 2024 (for the avoidance of doubt, other than
changes related to the Combination);
(c) no material changes in the dividend or capital policies of
International Paper;
(d) International Paper's accounting policies being consistently
applied over the forecast period; and
(e) no material change in the operational structure and strategy
of International Paper.
Timetable Update
The Combination remains subject to the Conditions set out in Part A of Part
Three of the scheme document published on 11 September 2024 in connection with
the Combination (the "Scheme Document"), including, amongst other things,
clearance from the European Commission.
International Paper and DS Smith continue to work proactively and
collaboratively with the European Commission with a view to obtaining the
requisite clearance. The Combination is expected to become Effective early in
the first quarter of 2025. Otherwise, the expected timetable of principal
events remains as set out on pages 15-16 of the Scheme Document.
International Paper FY 24 Profit Forecast
As required by Rule 27.2(d) of the Code, the International Paper Directors
confirm that: (a) there have been no material changes to the International
Paper FY 24 Profit Forecast, which remains valid; and (b) each of Deloitte LLP
("Deloitte"), as reporting accountants to International Paper and Merrill
Lynch International ("BofA Securities"), as financial advisor to International
Paper, has confirmed to International Paper that their respective reports
produced in connection with the International Paper FY 24 Profit Forecast,
which were included in International Paper's announcement dated 27 August
2024, continue to apply.
International Paper FY 25/26 Profit Forecasts
As required by Rule 27.2(d) of the Code, the International Paper Directors
confirm that there have been no material changes to the International Paper FY
25/26 Profit Forecasts, which remain valid.
Quantified Financial Benefits Statement
As required by Rule 27.2(d) of the Code, the International Paper Directors
confirm that: (a) there have been no material changes to the Quantified
Financial Benefits Statement, which remains valid; and (b) each of Deloitte,
as reporting accountants to International Paper and BofA Securities, as
financial advisor to International Paper, has confirmed to International Paper
that their respective reports produced in connection with the Quantified
Financial Benefits Statement, which were included in International Paper's
update announcement dated 4 April 2024, continue to apply.
Terms used but not defined in this announcement have the meaning given to them
in the Scheme Document.
Enquiries
International Paper +1 901 419 1731
Mark Nellessen
Jessica Seidner
BofA Securities (Sole financial adviser to International Paper) +44 20 7628 1000
Luca Ferrari
Geoff Iles
Antonia Rowan
Tom Brown
FGS Global (PR adviser to International Paper) +1 212 687 8080
Robin Weinberg
Kelsey Markovich
Hayley Cook
Kate Gorgi
James Murgatroyd +44 20 7251 3801
Gordon Simpson
Edward Treadwell
Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal adviser to
International Paper in connection with the Combination.
Disclaimers
Merrill Lynch International ("BofA Securities"), which is authorised by the
Prudential Regulation Authority ("PRA") and regulated by the Financial Conduct
Authority ("FCA") and the PRA in the United Kingdom, is acting exclusively for
International Paper and for no one else in connection with the matters
referred to in this announcement and will not be responsible to anyone other
than International Paper for providing the protections afforded to its clients
or for providing advice in relation to the matters referred to in this
announcement. Neither BofA Securities, nor any of its affiliates, owes or
accepts any duty, liability or responsibility whatsoever (whether direct or
indirect, whether in contract, in tort, under statute or otherwise) to any
person who is not a client of BofA Securities in connection with this
announcement, any statement contained herein or otherwise.
In accordance with the Code, normal United Kingdom market practice and Rule
14e-5(b) of the US Exchange Act, BofA Securities and its affiliates will
continue to act as exempt principal trader in DS Smith securities on the
London Stock Exchange. These purchases and activities by exempt principal
traders which are required to be made public in the United Kingdom pursuant to
the Code will be reported to a Regulatory Information Service and will be
available on the London Stock Exchange website at www.londonstockexchange.com.
This information will also be publicly disclosed in the US to the extent that
such information is made public in the United Kingdom.
Further information
This announcement is for information purposes only and is not intended to and
does not constitute, or form any part of, an offer, invitation or the
solicitation of an offer to purchase or subscribe, otherwise acquire,
subscribe for, sell or otherwise dispose of any securities or the solicitation
of any vote or approval in any jurisdiction pursuant to the Combination or
otherwise.
The Combination is subject to English law and to the applicable requirements
of the Code, the Panel, the Listing Rules, the London Stock Exchange and the
FCA.
The Combination is made solely by the Scheme Document, which contains the full
terms and conditions of the Combination. DS Smith Shareholders are advised to
read the formal documentation in relation to the Combination carefully. Each
DS Smith Shareholder is urged to consult their independent professional
adviser regarding the tax consequences of the Combination.
This announcement does not constitute a prospectus or a prospectus equivalent
document.
If you are in any doubt about the contents of this announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor, accountant
or from an independent financial adviser duly authorised under the Financial
Services and Markets Act 2000 (as amended).
This announcement has been prepared for the purpose of complying with English
law and the Code and the information disclosed may not be the same as that
which would have been disclosed if this announcement had been prepared in
accordance with the laws of jurisdictions outside England.
Overseas shareholders
The release, publication or distribution of this announcement in jurisdictions
other than the United Kingdom may be restricted by law and therefore any
persons who are subject to the laws of any jurisdiction other than the United
Kingdom (including Restricted Jurisdictions) should inform themselves about,
and observe, any applicable legal or regulatory requirements. In particular,
the ability of persons who are not resident in the United Kingdom or who are
subject to the laws of another jurisdiction to vote their DS Smith Shares in
respect of the Scheme at the Court Meeting, or to execute and deliver Forms of
Proxy appointing another to vote at the Court Meeting on their behalf, may be
affected by the laws of the relevant jurisdictions in which they are located
or to which they are subject. Any failure to comply with applicable legal or
regulatory requirements of any jurisdiction may constitute a violation of
securities laws in that jurisdiction. To the fullest extent permitted by law,
the companies and persons involved in the Combination disclaim any
responsibility or liability for the violation of such restrictions by any
person.
Copies of this announcement and any formal documentation relating to the
Combination are not being, and must not be, directly or indirectly, mailed or
otherwise forwarded, distributed or sent in or into or from any Restricted
Jurisdiction or any jurisdiction where to do so would constitute a violation
of the laws of such jurisdiction and persons receiving such documents
(including custodians, nominees and trustees) must not mail or otherwise
forward, distribute or send copies of this announcement or any formal
documentation relating to the Combination in or into or from any Restricted
Jurisdiction.
If the Combination is implemented by way of an Offer (unless otherwise
permitted by applicable law and regulation), the Offer may not be made,
directly or indirectly, in or into or by use of the mails or any other means
or instrumentality (including, without limitation, facsimile, e-mail or other
electronic transmission, telex or telephone) of interstate or foreign commerce
of, or any facility of a national, state or other securities exchange of any
Restricted Jurisdiction and the Offer will not be capable of acceptance by any
such use, means, instrumentality or facilities or from within any Restricted
Jurisdiction.
Further details in relation to DS Smith Shareholders in overseas jurisdictions
are contained in the Scheme Document.
Additional information for US investors in DS Smith
The Combination relates to the shares of an English company and is being made
by way of a scheme of arrangement provided for under Part 26 of the Companies
Act. The Combination, implemented by way of a scheme of arrangement, is not
subject to the tender offer rules or the proxy solicitation rules under the US
Securities Exchange Act of 1934, as amended (the "US Exchange Act").
Accordingly, the Combination and the Scheme is subject to the disclosure
requirements and practices applicable to a scheme of arrangement involving a
target company incorporated in the UK and listed on the London Stock Exchange,
which differ from the disclosure requirements of US tender offer and proxy
solicitation rules. If, in the future, International Paper exercises its right
to implement the Combination by way of an Offer and determines to extend the
Offer into the United States, the Combination will be made in compliance with
applicable US laws and regulations.
The New International Paper Shares to be issued pursuant to the Combination
have not been registered under the US Securities Act of 1933, as amended, (the
"US Securities Act"), and may not be offered or sold in the US absent
registration or an applicable exemption from the registration requirements of
the US Securities Act. The New International Paper Shares to be issued
pursuant to the Combination will be issued pursuant to the exemption from
registration provided by Section 3(a)(10) under the US Securities Act. If, in
the future, International Paper exercises its right to implement the
Combination by way of an Offer or otherwise in a manner that is not exempt
from the registration requirements of the US Securities Act, it will file a
registration statement with the SEC that will contain a prospectus with
respect to the issuance of New International Paper Shares. In this event, DS
Smith Shareholders are urged to read these documents and any other relevant
documents filed with the SEC, as well as any amendments or supplements to
those documents, because they will contain important information, and such
documents will be available free of charge at the SEC's website at www.sec.gov
or by directing a request to International Paper's contact for enquiries
identified above.
Neither the SEC nor any US state securities commission has approved or
disapproved of the New International Paper Shares to be issued in connection
with the Combination, or determined if this announcement is accurate or
complete. Any representation to the contrary is a criminal offence in the
United States.
The Scheme Document contains certain unaudited financial information relating
to DS Smith that has been prepared in accordance with the accounting standards
applicable in the UK and thus may not be comparable to financial information
of US companies or companies whose financial statements are prepared in
accordance with US generally accepted accounting principles. US generally
accepted accounting principles differ in certain significant respects from
accounting standards applicable in the UK.
It may be difficult for US DS Smith Shareholders to enforce their rights and
any claim arising out of the US federal securities laws against DS Smith or
its directors or officers, because DS Smith is incorporated under the laws of
England and Wales, some or all of DS Smith's assets are or may be located in
non-US jurisdictions, and some or all of its officers and directors are
residents of a non-US country. US DS Smith Shareholders may not be able to sue
a non-US company or its officers or directors in a non-US court for violations
of the US securities laws. Further, it may be difficult to compel a non-US
company and its affiliates to subject themselves to a US court's judgment.
US DS Smith Shareholders also should be aware that the Combination may have
tax consequences for US federal income tax purposes and under applicable US
state and local, as well as foreign and other, tax laws, and, that such
consequences, if any, are not described herein. US DS Smith Shareholders are
urged to consult with legal, tax and financial advisers in connection with
making a decision regarding the Combination.
Forward Looking Statements
This announcement contains certain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act 1995, as amended, that
are subject to risks and uncertainties. All statements other than statements
of historical fact or relating to present facts or current conditions included
in this announcement are forward-looking statements, including any statements
regarding guidance and statements of a general economic or industry-specific
nature. Forward-looking statements give International Paper's and DS Smith's
current expectations and projections with respect to the financial condition,
results of operations and business of International Paper, DS Smith and
certain plans and objectives of International Paper, DS Smith and the Combined
Company.
These forward-looking statements can be identified by the fact that they do
not relate only to historical or current facts. These statements are based on
assumptions and assessments made by International Paper and DS Smith in light
of their experience and their perception of historical trends, current
conditions, future developments and other factors they believe appropriate,
and therefore are subject to risks and uncertainties which could cause actual
results to differ materially from those expressed or implied by those
forward-looking statements.
Forward-looking statements often use forward-looking or conditional words such
as "anticipate", "target", "expect", "forecast", "estimate", "intend", "plan",
"goal", "believe", "hope", "aim", "will", "continue", "may", "can", "would",
"could" or "should" or other words of similar meaning or the negative thereof.
Forward-looking statements include statements relating to the following: (i)
the ability of International Paper and DS Smith to consummate the Combination
in a timely manner or at all; (ii) the satisfaction (or waiver) of conditions
to the consummation of the Combination; (iii) adverse effects on the market
price of International Paper's or DS Smith's operating results including
because of a failure to complete the Combination; (iv) the effect of the
announcement or pendency of the Combination on International Paper's or DS
Smith's business relationships, operating results and business generally;
(v) future capital expenditures, expenses, revenues, economic performance,
synergies, financial conditions, market growth, dividend policy, losses and
future prospects; (vi) business and management strategies and the expansion
and growth of the operations of the International Paper Group or the DS Smith
Group; and (vii) the effects of government regulation on the business of the
International Paper Group or the DS Smith Group. There are many factors which
could cause actual results to differ materially from those expressed or
implied in forward looking statements. Among such factors are changes in the
global, political, economic, business, competitive, market and regulatory
forces, future exchange and interest rates, changes in tax rates and future
business combinations or disposals.
These forward-looking statements are not guarantees of future performance and
are based on numerous assumptions regarding the present and future business
strategies of such persons and the environment in which each will operate in
the future. By their nature, these forward-looking statements involve known
and unknown risks and uncertainties because they relate to events and depend
on circumstances that will occur in the future. The factors described in the
context of such forward-looking statements in this announcement may cause the
actual results, performance or achievements of any such person, or industry
results and developments, to be materially different from any results,
performance or achievements expressed or implied by such forward-looking
statements. No assurance can be given that such expectations will prove to
have been correct and persons reading this announcement are therefore
cautioned not to place undue reliance on these forward-looking statements
which speak only as at the date of this announcement. All subsequent oral or
written forward-looking statements attributable to International Paper or DS
Smith or any persons acting on their behalf are expressly qualified in their
entirety by the cautionary statement above. Neither of International Paper nor
DS Smith undertakes any obligation to update publicly or revise
forward-looking statements, whether as a result of new information, future
events or otherwise, except to the extent legally required.
International Paper's Annual Report on Form 10-K for the fiscal year ended 31
December 2023, and International Paper's quarterly reports on Form 10-Q for
the periods ended 31 March 2024, 30 June 2024 and 30 September 2024 as filed
with the SEC contain additional information regarding forward-looking
statements and other risk factors with respect to International Paper.
Publication on website
A copy of this announcement and the documents required to be published
pursuant to Rule 26.1 and Rule 26.2 of the Code will be made available
(subject to certain restrictions relating to persons resident in Restricted
Jurisdictions), free of charge, at www.internationalpaper.com by no later than
12 noon on the Business Day following the date of this announcement.
Neither the contents of this website nor the content of any other website
accessible from hyperlinks on such website is incorporated into, or forms part
of, this announcement.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or
more of any class of relevant securities of an offeree company or of any
securities exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure following the
commencement of the Offer Period and, if later, following the announcement in
which any securities exchange offeror is first identified.
An Opening Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant securities
of each of (i) the offeree company and (ii) any securities exchange
offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a)
applies must be made by no later than 3.30 p.m. (London time) on the 10(th)
Business Day (as defined in the Code) following the commencement of the Offer
Period and, if appropriate, by no later than 3.30 p.m. (London time) on the
10(th) Business Day (as defined in the Code) following the announcement in
which any securities exchange offeror is first identified. Relevant persons
who deal in the relevant securities of the offeree company or of a securities
exchange offeror prior to the deadline for making an Opening Position
Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1
per cent. or more of any class of relevant securities of the offeree company
or of any securities exchange offeror must make a Dealing Disclosure if the
person deals in any relevant securities of the offeree company or of any
securities exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror(s), save to the extent that
these details have previously been disclosed under Rule 8. A Dealing
Disclosure by a person to whom Rule 8.3(b) applies must be made by no later
than 3.30 p.m. (London time) on the Business Day (as defined in the Code)
following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the Offer Period commenced and when any offeror was
first identified. If you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure, you should
contact the Panel's Market Surveillance Unit on +44(0)20 7638 0129.
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