DIVESTITURES

3 Months Ended

Mar. 31, 2024

Discontinued Operations and Disposal Groups [Abstract]

Divestiture of Augusta Paperboard Manufacturing Facility

On February 20, 2024 the Company entered into an agreement with Clearwater Paper Corporation to sell for approximately $700 million in cash all of the assets associated with the Augusta, Georgia paperboard manufacturing facility, which met the criteria to be considered a business. The Company expects the sale to be completed in the second quarter of 2024 and the assets and liabilities to be disposed of in connection with this transaction met the held for sale criteria as of March 31, 2024.

The fair value, less costs to sell was greater than the carrying value of the net assets held for sale. The assets related to the sale, and liabilities related to the sale were classified as Assets Held for Sale and Liabilities Held for Sale, respectively, within the Condensed Consolidated Balance Sheet as of March 31, 2024.

As the sale of the Disposal Group is not considered a strategic shift that will have a major effect on the Company’s operations or financial results, it was not reported as discontinued operations. The Company will continue to evaluate the Disposal Group for future impairments until it is sold. The Disposal Group is reported within the Paperboard Manufacturing segment.

The following table summarizes the Company’s assets and liabilities held for sale by major class:


In millions	March 31, 2024
Receivables, Net	$	1
Inventories, Net	84
Other Current Assets	5
Total Current Assets Held for Sale	$	90
Property, Plant and Equipment, Net	432
Goodwill	74
Intangible Assets, Net	38
Other Noncurrent Assets	11
Total Noncurrent Assets Held for Sale(a)	$	555

Total Assets Held for Sale	$	645
Short-Term Debt	1
Compensation and Employee Benefits	6
Other Accrued Liabilities	3

Total Current Liabilities Held for Sale	$	10
Long-Term Debt	9
Other Noncurrent Liabilities	11
Total Noncurrent Liabilities Held for Sale	$	20
Total Liabilities Held for Sale	$	30

(a) Noncurrent Assets Held for Sale within the Condensed Consolidated Balance Sheet also includes $2 million relating to two packaging facilities, which met the held for sale criteria as of March 31, 2024.

Impairment and Divestiture of Russian Business

In the second quarter of 2022, the Company began the process of divesting its interests in its two packaging facilities in Russia (the “Russian Operations”), which met the criteria to be considered a business, through a sale of 100% of the outstanding shares. The assets and liabilities to be disposed of in connection with this transaction met the held for sale criteria as of June 30, 2022 and each subsequent quarter end through the date of sale. During 2022 and 2023, the Company incurred $106 million of impairment losses associated with the Russian Operations including $96 million in 2022, which includes $12 million of goodwill impairment initially recognized in Q2 2022 and $10 million in 2023 (includes $4 million of impairment charges incurred in Q1 2023), all of which are included in the Business Combinations, Exit Activities, and Other Special Charges, Net line in the Consolidated Statement of Operations.

On November 30, 2023, the Company completed the sale to former members of management of its Russian Operations (the “Buyer”) for total consideration of $62 million, which was primarily a long-term loan to the Buyer with a maturity date in 2038 (the “Vendor Loan”). Given the current government sanctions and restrictions on movement of currency out of Russia to satisfy payments on the notes, the Company placed a valuation allowance of $48 million against the Vendor Loan receivable. The Vendor Loan, along with the other transaction agreements, grants the Buyer full power to direct the activities that most significantly impact the Russian Operations and economic rights over the Russian Operations, with no power or participating rights granted to the Company. There are, however, security rights in place to protect and facilitate the repayment of the Vendor Loan. Other rights included in the sale are contingent in nature and the Company does not believe such rights have significant value nor do they confer power to Company in evaluating which party is the primary beneficiary of this VIE. We will continue to monitor such rights and their impacts to the Company, if any, in the future. The Company has concluded that it is not the primary beneficiary of the business upon closing of the sale, and the Russian Operations were deconsolidated as of that date. The Vendor Loan, net is included in Other Assets on the Consolidated Balance Sheet. On the date of the sale, the Company recorded a final additional loss on the sale of $4 million, which is recorded in the Business Combinations, Exit Activities, and Other Special Charges, Net line in the Consolidated Statement of Operations. The operating results of the Russian Operations for the eleven months ended November 30, 2023 are included in the Company's Sales and Net Income in the Consolidated Statements of Operations. Total Net Sales and Net Income for the Russian Operations during this time were $90 million and $8 million, respectively. This includes total Net Sales and Net Income for Q1 2023 of $28 million and $1 million, respectively.

In addition, the Company historically had an intercompany payable to the Russian Operations. As of the date of the sale, the intercompany payable was converted to an external third-party loan payable (the “Loan Payable”). The Loan Payable will mature in 2037. The Loan Payable totaling $35 million is reflected in the Other Noncurrent Liabilities on the Consolidated Balance Sheet.