Pactiv Evergreen plans to take significant restructuring actions related to its Beverage Merchandising operations.
The Company expects to close its Canton, North Carolina mill and its converting facility in Olmsted Falls, Ohio with operations at both facilities expected to end during the second quarter of 2023. Production from the Olmsted Falls facility will be reallocated to other sites. The Company also continues to explore strategic alternatives for its Pine Bluff, Arkansas mill and Waynesville, North Carolina facility. The Company has not set a timetable in relation to this process. In addition, the Company plans to reorganize its management structure by combining the Beverage Merchandising and Food Merchandising businesses effective April 1, 2023.
“As we continue to confront a challenging market environment for our Beverage Merchandising business, we are faced with these difficult decisions that directly impact our employees,” said Mr. King. “We assess all changes to the business with considerable thought for our employees, customers, shareholders and communities, and do not take these decisions lightly. We remain committed to doing what's right, treating everyone with respect, and delivering on all of our commitments to our people, customers, shareholders and the communities where we operate.”
Approximately 1,300 positions will be eliminated as a result of these actions. The Company will provide outplacement assistance and severance to impacted employees, consistent with Company policy and labor union agreements.
As a result of the closures and change in management structure, we expect to incur non-cash charges in the range of $310 million to $330 million primarily during 2023 related to the acceleration of depreciation of plant and equipment and other asset impairments. We also expect to incur and pay cash charges in the range of $130 million to $185 million primarily during 2023 and 2024 related to severance and associated benefits and exit and disposal and other transition costs.
All the above estimates are provisional and include significant management judgments and assumptions that could change materially as we execute our plans. Actual results may differ from these estimates, and the execution of our plan could result in additional restructuring charges or impairments not reflected above.
“The strategic actions we are announcing today will reduce our capital expenditures and overhead costs. We expect these proactive steps to position us to remain competitive in the liquid packaging market and gain additional synergies from the further integration of our businesses. We are targeting an annualized reduction in our costs of approximately $30 million and a reduction of approximately $50 million in capital expenditures, with full annualized run rate of these benefits expected to be realized beginning in 2024,” concluded Mr. King.