R.J. Reynolds Tobacco Completes Sale of RJR Packaging

A few days late, but here’s the update…

WINSTON-SALEM, N.C., May 2 — R.J. Reynolds Tobacco Company (R.J. Reynolds) and RJR Packaging, L.L.C. today closed the sale of the assets and business of RJR Packaging to five packaging companies. The buyers have agreed to pay $48.2 million for the business, and entered into long-term tobacco packaging materials supply agreements with R.J. Reynolds.

The RJR Packaging assets, facilities and supply agreement rights for certain business areas were acquired as follows:

– Alcan Packaging Food and Tobacco Inc. — R.J. Reynolds’ printed packaging, including cartons, boxes and labels;
– Alcoa Flexible Packaging, L.L.C. — R.J. Reynolds’ cigarette foil and inner frame;
– Southern Graphic Systems, Inc. — cylinder engraving and prepress services;
– Mundet Inc. — R.J. Reynolds’ tipping and low-ignition propensity paper;
– Oracle Flexible Packaging, Inc. — non-R.J. Reynolds, or external, packaging business. Oracle also acquired RJR Packaging’s two main facilities, located in Winston-Salem at 1300 Cunningham Avenue and 190 East Polo Road.

RJR Packaging currently employs 740 people, and it is expected that at least 650 of them will ultimately receive offers for ongoing employment from one of the buyers, or from R.J. Reynolds.

Effective immediately after the sale, nine current RJR Packaging employees will become employees of Southern Graphic Systems, and about 75 employees will transfer to R.J. Reynolds Tobacco Co. The balance of RJR Packaging employees will become employees of Oracle Flexible Packaging. Over the next 24 months, the buyers will transition employees from Oracle to each company’s individual payroll.

Displaced employees will be eligible to receive severance benefits equaling two weeks of pay for every year of service (with a minimum of 26 weeks of pay), as well as a $25,000 bonus for those who stay the required period of time requested by the buyers during the transition period.

In December 2002, R.J. Reynolds announced its intent to sell RJR Packaging. Following the combination of R.J. Reynolds and the U.S. business of Brown & Williamson Tobacco Corp. in 2004, the packaging business was reassessed. In February 2005, R.J. Reynolds and RJR Packaging signed a letter of intent to sell RJR Packaging to the group of packaging companies.

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3 Comments

  1. Avatar Erin said:

    It looks like I will have 7 days I can "borrow." We have to accrue them but can use them. I need to get some money together and then I can probably book something for June/July. I still have to get my wisdom teeth out June 3 and because of benefits changing, I will have to pay out of pocket now. I also have a $900 loan to my CIP that will need to be paid. I have the money for that in savings, but want to wait and see about my teeth. I should be getting paid out for my vacation that was unused by rjr at the end of this month. Maybe that will give me enough money to book.

    May 5, 2005
  2. Avatar La said:

    Have you found out about vacation? Book that flight baby!

    May 5, 2005
  3. Avatar Erin said:

    No clue where I stand at this point, but I am currently an Oracle Felxible Packaging employee for the time being. This could change in the next 90 days. I will keep you all posted. Just keep your fingers crossed that I will have a job.

    May 5, 2005

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