Constar International Inc. and Pepsi Sign a New Four Year Agreement
Philadelphia, PA -October 10, 2008 -Constar International Inc. (NASDAQ: CNST) today announced that it has executed a four year agreement for supply of PET packaging products to Pepsi. The agreement covers supply of both bottles and preforms for cold fill applications beginning on January 1, 2009. As expected, compared to the existing agreement, the new agreement provides for a reduction in total volumes with a mix shift towards fewer bottles and more preform volume.
Constar's CEO, Michael Hoffman, commented, "Pepsi is a key long term customer of Constar's. We are proud that they have again put their confidence in us as a critical supply chain partner. We believe that our negotiations have brought us to a mutually beneficial agreement."
In conjunction with the signing of the new supply contract with Pepsi, Constar is undertaking a plan of restructuring to reduce the Company's overhead cost structure. The estimated annual cash overhead savings from the restructuring, including the savings from the previously disclosed closure of the Company's Houston Texas facility, is expected to be approximately $28-32 million.
Based upon the Company's current estimates, the Company believes that the new Pepsi agreement will result in lower sales but, after taking into account the expected net reduction in costs from the restructuring program, will result in higher cash flows from operating activities, net of investing activities as compared to those realized from the Pepsi cold fill business in 2008.
Cautionary Note Regarding Forward-Looking Statements
Except for historical information, all information in this news release consists of forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve a number of risks, uncertainties and other factors, which may cause the actual results to be materially different from those expressed or implied in the forward-looking statements. Important factors that could cause the statements made in this news release or the actual results of operations or financial condition of the Company to differ include the Company's relationship with its customers and suppliers; whether expected future volumes under the Pepsi contract are realized; whether the future product mix under such contract is consistent with the Company's expectations; whether the Company achieves expected restructuring savings associated with such contract; and the impact of the foregoing factors on the Company's financial position. Other important factors are discussed under the caption "Risk Factors" in the Company's Form 10-K Annual Report for the year ended December 31, 2007 and in subsequent filings with the Securities and Exchange Commission made prior to, on or after the date hereof. The Company does not intend to review or revise any particular forward-looking statement in light of future events.
About Constar
Philadelphia-based Constar is a leading global producer of PET (polyethylene terephthalate) plastic containers for food, soft drinks and water. The Company provides full-service packaging solutions, from product design and engineering, to ongoing customer support. Its customers include many of the world's leading branded consumer products companies.
For more information contact:
Walter S. Sobon Executive Vice President and Chief Financial Officer
(215) 552-3700
Ed Bisno Bisno Communications
(212) 717-7578