Attorneys complete unique buyout despite economy, Sept. 11.

• Date: 24 April 2002

Byline: Tony Anderson

Managers of a Wisconsin-based paper manufacturer and a Wisconsin law firm worked together to develop one of the country's largest employee stock ownership plan buyouts in a process that could serve as a template for future company purchases.

Despite the financial challenges associated with last year's recessing economy and the turmoil following the Sept. 11, 2001, attacks, the team negotiated the $810 million purchase of Appleton Papers, Inc. from its European parent company, Arjo Wiggins Appleton, PLC.

A key feature of the project, facilitated by attorneys from Godfrey & Kahn, was the transfer of $107 million from Appleton Paper employees' retirement funds to serve as the down payment for the company. The process utilized a unique union of employee stock ownership plan (ESOP) and S corporation to carry out the purchase.

Paul Karch, Vice President of Human Resources & Law at Appleton Papers, and Dale Parker, Vice President of Finance, brought in a team of lawyers from Godfrey & Kahn, led by Christopher B. Noyes and James N. Phillips, two partners from the firm's Milwaukee office. The third leg of the team included members of PricewaterhouseCoopers LLP's Milwaukee office.

The ESOP/S Corp Plan

Approximately $107 million was transferred from employee 401(k)s and 401(a)s to an ESOP that capitalize Paperweight Development Corp, a shell formed to make the acquisition of Appleton Papers. Although Paperweight was a C corporation, it did a lot to meet the standards for an S corporation providing a number of tax benefits, Noyes said.

Phillips...