Griffin Paper Corporation - Page 15

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          prices of the major American pulp companies; a 3-percent discount           
          was commonly offered to purchasers of market pulp, and it did not           
          represent a special price or discount resulting from KKO's                  
          interest in LRFP.  These benefits to KKO were for the full term             
          of the Pulp Sales Agreement, and KKO’s discount applied in both             
          strong and weak markets.  The Pulp Sales Agreement also provided            
          that either party could terminate the agreement only on 1-year’s            
          written notice given on or after July 1, 1999, in which case                
          termination would take effect at the end of 5 years from the date           
          of the notice.  Pulp shipments for the period following the date            
          of the notice would be the same for the first 12 months and then            
          be reduced cumulatively.                                                    
               The pulp mill commenced operations in 1984.  In that year,             
          KKO purchased 2,555 tons of pulp from LRFP, and, in the next                
          year, KKO purchased 47,128 tons of pulp from LRFP.  The purchased           
          pulp was an important source of supply to KKO.  In 1986, the                
          markets improved, and LRFP began to develop new markets.  In late           
          1986, the parties to the Pulp Sales Agreement agreed to suspend             
          the Pulp Sales Agreement for 1987, and, by mutual consent on                
          December 31, 1987, the parties to the Pulp Sales Agreement                  
          terminated the agreement in toto.                                           
               In February 1988, Griffin notified GNN that it was going to            
          exercise its put.  On January 2, 1989, Griffin did so, exercising           
          its right to sell all of its common and preferred stock in LRFP             
          on July 3, 1989, with an earnings date of May 31, 1989.  LRFP’s             




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