March 11, 2011 / 1:57 PM / in 7 years

CORRECTED-UPDATE 1-Cascades to sell Dopaco to Reynolds for $400 mln

(Corrects paragraph 3 to say Cascades’ total liabilities were C$2.44 billion, not C$2.4 million) (Follows alerts)

March 11 (Reuters) - Packaging and paper products company Cascades Inc said it will sell Dopaco Inc, its foodservice packaging business, to Reynolds Group Holdings Ltd for $400 million in an all-cash deal.

Net proceeds from the transaction, expected to close before the end of April, will be used mainly to pay down debt, Cascades said in a statement.

The company said the sale is part of its overall strategy to gain more financial flexibility. It has total liabilities of C$2.44 billion ($2.50 billion), according to Thomson Reuters data.

Dopaco makes cups and folding cartons for the quick-service restaurant and food service industries.

Reynolds is a subsidiary of New Zealand-based Rank Group Ltd, which is owned by billionaire investor Graeme Hart.

On Thursday, Cascades said it would restructure its Norampac unit in the United States following “several years of financial challenges at that location,” and it will result in closure of a box facility, affecting 100 jobs.

The company will, however, continue to supply boxboard to Dopaco, through a five-year supply agreement.

Bank of America Merrill Lynch is acting as financial adviser to Cascades. ($1 = 0.975 Canadian Dollars) (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Sriraj Kalluvila)

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