Clearwater Paper Corporation
) has recently authorized a $100 million share repurchase program
to purchase its common stock over a period of time through open
market or negotiated transactions. The company intends to
complete the share repurchase program in 2013, following which it
intends to return approximately 50% of discretionary free cash
flow to shareholders in 2014 and 2015. The current share
repurchase program replaces the company's erstwhile $30 million
share repurchase authorization initiated in Jul 2011.
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Clearwater Paper expects to fund the share repurchases through
available cash. In order to increase its liquidity, the company
has announced a debt offering of $275 million senior notes due
2023. Clearwater Paper expects to utilize approximately $100
million of the net proceeds from the debt offering for its share
Furthermore, the company anticipates to generate significant cash
flow to fuel its share repurchases with the successful start-up
of the TAD (through air drying) paper machine at its Shelby,
North Carolina facility. In 2010, Clearwater Paper began
construction of new tissue manufacturing and converting
facilities at its Shelby factory to expand its wings in the
Consumer Products segment in the Eastern U.S.
The advanced TAD machine that was subsequently launched at this
production facility and became fully operational in fourth
quarter 2012 is capable of producing ultra grades of private
label tissue products. This is likely to enable Clearwater Paper
to supply a full range of TAD products to customers across the
U.S., and consequently establish itself as the only private label
tissue products company offering a full line of tissue products
to its customers.
Clearwater Paper manufactures and sells pulp-based products such
as consumer tissue, away-from-home tissue, parent roll tissue,
machine glazed tissue, and bleached paperboard across the globe.
The company faces stiff competition from other leading players in
the industry like
International Paper Company
Orchids Paper Products Company
), due to which it has to continually invest in value drivers
that act as a hedge against competition. We currently have a
Zacks Rank #2 (Buy) for Clearwater Paper.