Solo Cup announces sale of Hoffmaster business

Solo Cup Company, a leading provider of disposable foodservice products based in Highland Park, today announced it has signed an agreement to sell its Hoffmaster business to an affiliate of funds managed by Kohlberg & Company LLC for about $170 million.

Subject to regulatory approvals and other customary closing conditions, the transaction is expected to close within the next 45 days. Kohlberg has received a commitment to obtain financing for the transaction, subject to customary conditions.

Under the terms of the agreement, a newly formed affiliate of Kohlberg will acquire all of the assets of the Hoffmaster, including its product portfolio of disposable tableware and special occasions consumer products and associated manufacturing equipment, as well as two manufacturing facilities located in Oshkosh and Appleton, Wis., a leased distribution center located in Indianapolis, and a sourcing subsidiary in Hong Kong.

"This decision is one that comes from our previously discussed initiative to divest non-core assets," said Robert M. Korzenski, CEO of Solo Cup, in a statement. "While the Hoffmaster business is strong, this divestiture allows us to reduce our overall debt burden and increase our focus and investment on improving performance and positioning the Company for growth."

The proceeds from the sale are expected to be applied to the company's term loan.

"This transaction, when complete, combined with the previously announced sale-leaseback of six properties and improved working capital management will have reduced our debt by approximately $300 million since the beginning of the year," added Korzenski.

Hoffmaster makes specialty napkins, placemats, table covers and other items for the restaurant and lodging industries. Through its Sensations brand and Creative Expressions Group, the company produces premium disposable tableware for special occasions sold through supermarkets and party stores.

Kohlberg & Company is a U.S. private equity firm with offices in Mt. Kisco, New York and Palo Alto, California. Kohlberg has invested $1.8 billion in equity across six private equity funds with an aggregate transaction value of about $7 billion.