Blackstone-backed plastics maker files $350m IPO

Graham Packaging's filing follows a failed $3.2bn reverse merger with Tom Hicks' SPAC, which instead chose to purchase NGP-backed Resolute Energy.

Graham Packaging, a plastic container maker owned by the Blackstone Group for 11 years, has registered to raise up to $350 million in a public offering. It is one of many portfolio companies Blackstone is expected to take public in coming months.

The company would use IPO proceeds to repay debt, according to a filing with the Securities and Exchange Commission.

It is unclear whether Blackstone, which owns around 80 percent of the company, will exit some or all of its stake in Pennsylvania-based Graham.

Graham had previously agreed to be taken public by Hicks Acquisition Co., a special purpose acquisition company (SPAC) affiliated with Hicks Muse Tate & Furst co-founder Tom Hicks, in a $3.2 billion deal inked in June 2008.

Graham Packaging: seeking a fruitful exit

Chinh Chu, a Blackstone senior managing director who sits on Graham’s board, said during an analyst call at the time that Blackstone hadn't been looking for an exit. “Frankly, we were not intending to do anything with the company, whether it was taking it public or selling the company, however we were approached by Tom, [with whom] we have had a very long-term relationship, and by virtue of the conversation, felt it was a good long-term partnership,” Chu said.

Believed to have been the largest ever such agreement between a SPAC and an industrial company, the deal's terms were amended in January, making it easier for either party to terminate the agreement.

It later fell apart, and in August, the SPAC agreed to purchase Natural Gas Partners-backed Resolute Natural Resources for $582 million. Resolute later went public on the New York Stock Exchange, via a reverse merger with Hicks. Hicks raised $552 million in its public offering in October 2007, a record at the time for a blank cheque company.

Graham, which makes containers for multinationals including Coca-Cola, Unilever, Clorox, Colgate, Anheuser-Busch and Heinz, this week reported third quarter net sales of $589 million, down 10.7 percent compared to the third quarter 2008. For the nine months ended 30 September its net sales stood at $1.7 billion, a 13.3 decrease from the same period last year.

Blackstone bought the company from Donald Graham in 1998 for $977 million. Management and DB Capital (now MidOcean Partners) participated in the original deal, though it is unclear if they are still equity holders. In 2000 and 2001, Blackstone and its group of co-investors injected an additional $100 million into the company as it reported weak performance. In 2004, it doubled the platform with the $1.2 billion purchase of the plastic container business of Owens-Illinois.