REYNOLDS GROUP HOLDINGS

January 18, 2012

EXECUTIVE SUMMARY

Reynolds Group Holdings (Reynolds or the Company) is a leading manufacturer of consumer food and beverage packaging products. The
Company is owned by Rank Group, a New Zealand-based investment firm controlled by Graeme Hart. The Company has grown rapidly over the
last three years via debt-financed acquisitions.

Reynolds did $13.7 billion of revenue and $2.5 billion of EBITDA for PF LTM 9/30/11. The Company operates through six segments:

- SIG manufactures aseptic carton packaging systems for beverage and liquid food products, primarily in Europe and Asia
- Evergreen manufactures fresh carton packaging for beverage products and liquid packaging board (LPB), primarily in North America
- Closures manufactures plastic beverage caps and closures, primarily for soft drinks, bottled waters and other beverage products
- Reynolds Consumer Products manufacturers aluminum foil, wraps, waste bags, food storage bags and disposable cookware
- Pactiv manufacturers food packaging products including tableware, takeout containers, foam trays and cups
- Graham Packaging manufactures molded plastic containers for food and beverage products and other household products

In September 2011, Reynolds purchased Graham Packaging for $4.4 billion (8.1x LTM EBITDA of $546 million). Reynolds financed the
transaction by issuing / assuming an additional ~$5 billion in debt. Pro forma for the acquisition, Reynolds is levered approximately 7.0x the
pre-synergy LTM EBITDA of $2.5 billion. Management has stated a desire to move towards 5.0x leverage in the near-term, but noted that they
will not delever past 4.0x without more acquisitions.

Recommendation: This credit is fundamentally strong. The portfolio of businesses have leading market positions, stable end-markets and have
demonstrated consistently high margins in challenging operating environments.

Buy 2014 Graham Packaging Senior Subordinated Notes: At 102.0, these Notes offer a yield to call of 7-9% (unless called in Q1
2012). Graham is not a guarantor of any other Reynolds debt and these Notes are likely to be called in 2012.
Buy 2017 Senior Subordinated Notes: At 83.5, these Notes offer a yield of 13.9% for playing near the bottom of the capital structure.
This debt is effectively senior to the Pactiv debt in a restructuring, so effective leverage is 6.5x face EBITDA.
Buy 2016 Euro-Denominated Senior Secured Notes: At 105.1, these Notes offer a yield of 6.5% for face leverage of 4.2x.
Pass on Pactiv Notes: These Notes have been stripped of guarantees and offer de minimis recovery in a restructuring.

CAPITAL STRUCTURE

Debt / LTM Debt / LTM
Interest Price Face Market Adj. EBITDA Adj. EBITDA - Capex
Maturity Rate 1/17/12 9/30/11 1/17/12 Face Market Face Market YTM
Revolver ($120MM)
(1)
Nov-14 L + 5.25% 100.5% $77 $78 7.0%
Revolver (80MM)
(1)
Nov-14 E + 5.25% 100.5% 28 28 7.0%
2018 Senior Secured TL B
(1)
Feb-18 L + 5.25% 100.5% 2,313 2,325 7.2%
2018 Senior Secured TL (250MM)
(1)(2)
Feb-18 E + 5.25% 100.5% 318 319 7.5%
2018 New USD Senior Secured TL
(1)
Aug-18 L + 5.25% 100.5% 2,000 2,010 7.2%
2016 Senior Secured Notes Oct-16 7.750% 106.4% 1,125 1,197 6.2%
2016 Senior Secured Notes (450MM)
(2)
Oct-16 7.750% 105.1% 575 604 6.5%
2019 Senior Secured Notes Apr-19 7.125% 104.0% 1,500 1,560 6.4%
2019 New Senior Secured Notes Aug-19 7.875% 106.1% 1,500 1,592 6.8%
2021 Senior Secured Notes Feb-21 6.875% 102.9% 1,000 1,029 6.5%
Other Secured Debt N/A 55 55
First Lien Debt $10,491 $10,797 4.2x 4.4x 5.8x 5.9x
2018 Senior Unsecured Notes May-18 8.500% 98.8% 1,000 988 8.8%
2019 Senior Unsecured Notes Apr-19 9.000% 98.0% 1,500 1,470 9.4%
2019 New Senior Unsecured Notes Aug-19 9.875% 100.3% 1,000 1,003 9.8%
2021 Senior Unsecured Notes Feb-21 8.250% 91.5% 1,000 915 9.7%
Total Guaranteed Senior Unsecured Debt $14,991 $14,866 6.0x 6.0x 8.2x 8.2x
2016 Senior Unsecured Notes (480MM)
(2)(4)
Dec-16 8.000% 89.8% 613 551 10.7%
2017 Senior Subordinated Notes (420MM)
(2)(5)
Jun-17 9.500% 83.5% 537 448 13.9%
Total Guaranteed Subordinated Debt $16,141 $15,990 6.5x 6.4x 8.9x 8.8x
2017 Graham Senior Unsecured Notes Jan-17 8.250% 101.3% 14 14 7.9%
2018 Graham Senior Unsecured Notes Oct-18 8.250% 101.9% 19 20 7.9%
2014 Graham Senior Subordinated Notes Oct-14 9.875% 102.0% 355 362 9.0%
2012 Pactiv Notes Jul-12 5.875% 100.8% 249 251 4.2%
2017 Pactiv Notes Jun-17 8.125% 83.6% 300 251 12.4%
2018 Pactiv Notes Jan-18 6.400% 67.1% 16 11 14.9%
2025 Pactiv Notes Dec-25 7.950% 66.0% 267 176 13.4%
2027 Pactiv Notes Apr-27 8.375% 71.6% 200 143 12.6%
Total Debt $17,561 $17,368 7.1x 7.0x 9.6x 9.5x
Cash
(3)
(555) (555)
Net Debt $17,006 $17,006 6.9x 6.9x 9.3x 9.3x
(1) Subject to LIBOR floor of 1.25% to 2%. LTM EBITDA $2,480
(2) Based on USD:EUR exchange rate of 1:1.28. LTM EBITDA - Capex $1,821
(3) Pro forma for repayment of Graham unsecured notes.
(4) Guaranteed by operating subsidiaries on a Senior Subordinated basis
(5) Guaranteed by operating subsidiaries on a Subordinated basis


CORPORATE STUCTURE




INVESTMENT CONSIDERATIONS


Positive Negative

- Stable end markets and broad product offering
- High, stable margins
- Strong brands (Reynolds and Hefty have 90%+ and 70%+
brand awareness)
- Leading market position #1 or #2 across all product lines
- Recurring revenue with long-term contracts at SIG, Closures,
Evergreen and Foodservice
- Barriers to entry: sole packaging provider for many
customers with on-site PP&E


- High total leverage (7.1x pre-synergy EBITDA)
- Continued integration story; acquisitions likely to continue
- Foreign assets and foreign borrowers (though excluding
Graham ~96% of assets are guarantors)
- Highly unionized labor force
- Consolidation among customers provides buying power
- Despite hedging and pricing pass-throughs, vulnerable to
raw material cost swings (SIG and Reynolds Consumer)
- New competitor (Greatview) threatening duopoly status of
aseptic packaging business
Reynolds Group Holdings
(Issuer of Financial Statements)
BP I
BP II (Debt Guaranteed by Operating Subs)
2017 Senior Unsecured Notes (480MM)
2017 Senior Subordinated Notes (420MM)
Graeme Hart
Reynolds Group Holdings Inc.
Co-borrower under credit facility
Closures SIG
Graham
2017 Graham Senior Unsecured Notes
2018 Graham Senior Unsecured Notes
2014 Graham Senior Subordinated Notes
Pactiv
2012 Pactiv Notes
2017 Pactiv Notes
2018 Pactiv Notes
2025 Pactiv Notes
2027 Pactiv Notes
Reynolds Group Issuer
2016 Senior Secured Notes
2016 Senior Secured Notes (450MM)
2019 New Senior Secured Notes
2019 Senior Secured Notes
2021 Senior Secured Notes
2016 Senior Unsecured Notes (450MM)
2018 Senior Unsecured Notes
2019 Senior Unsecured Notes
2019 New Senior Unsecured Notes
BP III
Evergreen
Reynolds Consumer Products
Operating Entity
Senior Secured Intercompany Loan
Intercompany Loan
Intercompany Loan
Co-borrower under credit facility



ACQUISITION HISTORY

The Companys acquisition timeline is provided below:


History notes:
Reynolds Consumer / Closures: Former Alcoa businesses. Consumer group has roots in Reynolds Metals Company.
SIG: Swiss company that also manufactured firearms and railway cars before divesting those businesses in 2000.
Graham Packaging: Roots in plastic packaging. Acquired Liquid Container in September 2010.
Evergreen: Former International Paper business. Acquired by Graeme Hart through purchase of Carter Holt Harvey.
Pactiv: Spun-off from Tenneco (auto parts) in 1999.

COMPANY OVERVIEW


Adjusted EBITDA by Segment

Revenue by Geography






SIG

SIG is a leading manufacturer of aseptic carton packaging systems for both beverage and liquid food products. Aseptic carton packaging (most
prevalent in Europe and Asia) is designed to allow beverages or liquid food to be stored for extended periods of time without refrigeration. SIG
supplies complete aseptic carton packaging systems, which include aseptic filling machines, aseptic cartons, spouts, caps and closures. SIG holds
the number two market position in the global aseptic beverage carton market after Tetra Pak.
evenye
Revenue by Geography




Multiple
Assets Seller Closed TEV Sales EBITDA Margin Sales EBITDA
SIG Public Shareholders 5/11/07 $2,857 $2,255 $327 14.5% 1.3x 8.7x
Closures Rank Group 11/5/09 1,223 856 148 17.3% 1.4x 8.3x
Reynolds Consumer Rank Group 11/5/09 1,800 1,216 280 23.1% 1.5x 6.4x
Evergreen Carter Holt Harvey 5/4/10 1,522 1,429 167 11.7% 1.1x 9.1x
Pactiv Foodservice Public Shareholders 11/16/10 6,011 3,443 712 20.7% 1.7x 8.4x
Graham Packaging Public Shareholders 9/8/11 4,423 2,887 546 18.9% 1.5x 8.1x
Reynolds
Consumer
Products
22%
Graham
Packaging
22%
Pactiv
Foodservice
20%
SIG
19%
Evergreen
9%
Closures
8%
North
America
76%
Europe
14%
Asia
6%
South
America
3%
Other
1%
Europe (ex.
Germany)
41%
Germany
17%
Asia (excl.
China)
15%
China
11%
Middle East
7%
North America
5%
South America
4%


The market is an effective duopoly with Tetra Pak and SIG being the only two major sellers of aseptic carton filling systems. Tetra Pak is
significantly larger than SIG and had an installed filling machine base of ~9,000 machines vs. just 1,000 for SIG. Tetra Pak generates more than
50% of its revenue from emerging markets and is very strong in Asia. Recently, a new Chinese competitor Greatview began selling Tetra
Pak cartons. They have a ~15% market share in China and are building a plant in Germany that will be complete in ~2 years. Greatview
competes in the low end of the market (they dont have closure cartons). Greatview has PE-backing from Bain and CDH, and is run by former
executives of Tetra Pak in China.

The aseptic market is ~8.0x the size of the fresh market globally and faces minimal threats due to lack of a cold distribution network in emerging
economies. Cold distribution networks are unique to North America and parts of Western Europe.

SIGs business model is based on providing aseptic carton packaging filling machines combined with multi-year aseptic carton supply and
service contracts. Aseptic cartons are sold to the customer in the form of a sleeve designed to be used exclusively with SIGs aseptic filling
machines.

The packaging material for aseptic carton sleeves is composed of a laminate of cartonboard, resin and aluminum. SIG does not have automatic
price pass-throughs built into its contracts because of the tendency of customers use the cartons of the low-cost provider. Management was
expecting a second price increase from Tetra Pak in 2011 to catch up with resin price increases, but they never went through with it.

Revenue was at SIG was up 9.5% q-o-q for Q3 2011. Some of this growth was due to the strengthening of the Euro against the dollar. Volumes
have been an issue as Western European markets continue to substitute PET containers for cartons. The business continues to diversify out of
Europe. In 2007, SIG had 85%+ of its revenue from Europe. Today this is less than 60% led by strong growth in China, South America and the
Middle East. Long-term Europe is likely to be flat or slightly down.

Evergreen

Evergreen is a vertically integrated manufacturer of carton packaging for beverage products (primarily juice and milk). Evergreen is the leading
global supplier of fresh beverage cartons and fresh liquid packaging board. Fresh carton packaging is predominant in North America and is
designed for beverages that require a cold-chain distribution system. Evergreen produces its own liquid packaging board at its mills in Arkansas
and North Carolina. Evergreen also produces groundwood (primarily for catalogs / magazines) and uncoated freesheet primarily for envelope,
specialty and offset printing paper.

Revenue by Product

Revenue by Geography




Evergreen sells filling machines as well as the carton sleeves to produce and fill fresh carton packaging. Evergreen is the largest seller of both
liquid packaging board and fresh carton packaging globally. The fresh carton market is fairly consolidated and Evergreen has an estimated 70%
market share. The Companys traditional market is North America, but is also #1 in China, #1 in South Korea and #2 in Taiwan. Plastic
packaging solutions, such as those produced by Graham Packaging, can be a substitute for fresh carton packaging. Competes against Elopak and
Tetra Pak.

Evergreen operates two integrated pulp and paper mills and 14 sleeve production plants. The production of liquid packaging board facilitates
vertical integration. Evergreen outsources the production of spouts and caps to the Closures segment.

Revenue was up 2.2% Evergreen q-o-q for Q3 2011. Growth was due to higher pricing offset by volume decreases. Margins have been up
because of increases in UFS and groundwood prices. The fresh carton segment shed some market share to plastic in North America during 2011.

Reynolds Consumer Products

Reynolds Consumer manufactures consumer products such as foil, wraps, waste bags, food storage bags, and disposable tableware. Many of its
products are sold under the brand names Reynolds and Hefty. The business operates primarily in North America and distributes its products
through grocery stores, drug stores and big-box retailers.


Carton
Packaging
42%
Board
26%
Uncoated
Freesheet
16%
Coated
Groundwood
10%
Spouts
3%
Filling
Machines
3%
North America
76%
Asia
12%
Latin America
7%
Europe
4%
Other
1%


Revenue by Product

Revenue by Geography






The Companys product portfolio is segmented into Waste & Storage, Cooking and Tableware. The Company has a #1 or #2 market position in
most of its product segments. The Company also sells some store-branded products.

Reynolds principal raw materials are aluminum and plastic resin. The business typically has one-year contracts with resin suppliers and multi-
year contracts with aluminum suppliers. The business operates 12 manufacturing plants, all in the United States and shares 28 manufacturing
plants with Pactiv Foodservice.

Reynolds consumer was up 0.2% q-o-q for Q3 2011 (PF for the addition of Hefty). Volumes were down but were offset by increases in raw
material cost pass-throughs in most product lines. The segment is anticipated to see some revenue synergies going forward from the foodservice
distribution network. Segment was recently chosen by Walmart to be a preferred supplier which will provide strong shelf space at Walmart.

Pactiv Foodservice

Pactiv manufactures foodservice and food packaging products including tableware, takeout service containers, foam trays and cups. The
Company distributes its products through foodservice distributors, food processors and supermarket distributors. Additionally, the Company
manufactures laminated products for the tobacco, telecommunications and construction industries.


Revenue by Product

Revenue by Geography






According to management, 80% of Pactivs products have a #1 market share. The business differentiates itself through the breadth and depth of
the product offering. Management claims it takes six competitors to match the offering of one truck from Reynolds because of the product
variety.

Pactiv operates 25 manufacturing plants in North America and three in Europe and has two joint ventures in China. Pactiv shares 28
manufacturing plants with Reynolds Consumer Products. The Company anticipates closing more facilities in 2012 and closed 7 plants and
eliminated 1,000 employees in 2011.

Revenue was up 21.1% q-o-q for Q3 2011. Most of this increase was driven by the acquisition of Dopaco. Management reported higher pricing
(due to resin pass-throughs) and slightly lower volumes due to product divestitures. The pricing pass-throughs in this segment have a ~3 month
lag. If resin prices stabilize it should translate into higher margins. The segment has realized $96 million of synergies through the end of the
quarter with the run-rate of synergies of $168 million. These synergies were ahead of plan.

Waste /
Storage
37%
Cooking
30%
Tableware
29%
Other
4%
United States
96%
Asia
1%
Middle East
1%
Other
2%
Clear Plastics
29%
Foam
22%
Tableware
17%
Specialty
Packaging
13%
Paper
7%
Aluminum
5%
Other
7%
United States
85%
Canada
4%
Mexico
4%
Europe
5%
Asia
2%


Closures

Closures manufactures plastic caps and closures for the carbonated soft drinks, non-carbonated soft drinks and bottled water segments of the
global beverage market. Closures has a #1 global market share in plastic beverage caps and closures market. The Company also serves the liquid
dairy, food, beer and liquor, pharmaceutical and automotive fluid markets. In addition to supplying the plastic caps and closures, the Company
offers capping equipment. Closures has a 15% global market share and a 60% market share in North America.

Revenue by Product

Revenue by Geography





Closures operates 33 manufacturing plants.

Revenue was up 10.9% q-o-q for Q3 2011. The group benefited from higher volume, higher pricing and favorable currency movements.
Closures reportedly took market share from competitor Rexam this year. Asia and Europe were relatively flat. One risk cited by management is
that Coke is trying to produce closures in Australia as a test. Several years ago Pepsi attempted this but ultimately abandoned the idea. Going
forward, growth is anticipated to come on the non-carbonated side of the business.

Graham Packaging

Graham manufactures blow molded plastic containers for branded consumer products. The Company has the #1 market share in North America
for hot-fill juices, sports drinks, yogurt drinks, motor oil, liquid fabric care, dish detergents, hair care and skin care products. Many of the
Companys largest customers have been customers for 20+ years. 90% of the Companys sales are in product categories where the Company has
the #1 market position.

Revenue by Product

Revenue by Geography






Graham has approximately 100 plants worldwide, of which approximately one third are located on-site at customer facilities. This on-site capex
makes it difficult for competitors to easily switch suppliers. 80% of the Companys products use proprietary technology. 100% of contracts have
resin pass-throughs.

Revenue increased by 28.3% q-o-q for Q3 2011. Most of this was driven by acquisition of Liquid Container. Revenue was reportedly down pro
forma for Liquid Container due to volume declines. The Company estimated $75 million in synergies for the Graham merger. $28 million had
been achieved as of the end of December.


Soft Drinks
52%
Water
14%
Equipment
6%
Food
4%
Dairy
1%
Other
23%
North America
40%
Asia
20%
Europe
19%
South America
18%
Middle East
3%
Food &
Beverage
62%
Houshold
18%
Automotive
Lubricants
13%
Personal Care
7%
North America
87%
Europe
9%
Rest of World
4%


HISTORICAL P&L SUMMARY




Fiscal Year Ended LTM Quarter Ended
($ millions) 2008A 2009A 2010A 9/30/11 9/30/10 12/31/10 3/31/11 6/30/11 9/30/11
Revenue
SIG $1,747 $1,668 $1,846 $2,018 $468 $520 $461 $525 $512
Evergreen 1,506 1,429 1,583 1,606 409 409 389 390 418
Closures 1,017 980 1,174 1,312 320 286 295 376 355
Reynolds Consumer Products 2,741 2,475 2,540 2,566 624 715 541 685 626
Pactiv Foodservice 3,481 3,436 3,449 3,328 777 769 712 906 941
Graham Packaging 2,978 2,643 2,812 3,030 630 644 757 821 808
Corporate (66) (96) (131) (147) (34) (39) (31) (37) (39)
Revenue $13,404 $12,535 $13,273 $13,713 $3,194 $3,304 $3,124 $3,665 $3,620
Growth (%)
SIG -4.5% 10.7% 9.5%
Evergreen -5.1% 10.8% 2.2%
Closures -3.6% 19.8% 10.9%
Reynolds Consumer Products -9.7% 2.6% 0.2%
Pactive Foodservice -1.3% 0.4% 21.1%
Graham Packaging -11.2% 6.4% 28.3%
Total -6.5% 5.9% 13.4%
EBITDA
SIG $415 $475 $513 $484 $126 $148 $107 $114 $115
Evergreen 119 167 196 218 68 56 62 31 69
Closures 129 148 170 186 56 36 37 56 57
Reynolds Consumer Products 416 628 562 559 127 177 110 139 133
Pactiv Foodservice 441 543 458 507 104 102 105 144 156
Graham Packaging 527 541 558 555 130 125 135 155 140
Corporate (43) (12) (20) (29) (2) (8) (7) (8) (7)
Adjusted EBITDA
(1)
$2,004 $2,490 $2,437 $2,480 $609 $636 $550 $631 $663
Capital Expenditure (632) (620) (640) (659) (148) (200) (143) (158) (157)
EBITDA - Capex $1,372 $1,870 $1,797 $1,821 $461 $436 $407 $473 $506
EBITDA Margin (%)
SIG 23.8% 28.5% 27.8% 24.0% 26.9% 28.5% 23.2% 21.7% 22.5%
Evergreen 7.9% 11.7% 12.4% 13.6% 16.6% 13.7% 16.0% 7.9% 16.5%
Closures 12.7% 15.1% 14.5% 14.2% 17.5% 12.6% 12.6% 14.9% 16.0%
Reynolds Consumer Products 15.2% 25.4% 22.1% 21.8% 20.4% 24.8% 20.3% 20.3% 21.3%
Pactiv Foodservice 12.7% 15.8% 13.3% 15.2% 13.4% 13.3% 14.7% 15.9% 16.6%
Graham Packaging 17.7% 20.5% 19.8% 18.3% 20.6% 19.4% 17.9% 18.8% 17.3%
Adjusted EBITDA 15.0% 19.9% 18.4% 18.1% 19.1% 19.3% 17.6% 17.2% 18.3%
(1) Pre-synergy figures.


PROJECTIONS




CASH FLOW GENERATION

The Company is anticipated to generate approximately $400 million in free cash flow in 2012. Reynolds has a $249 million Pactiv bond maturity
and $200 million in amortization over the course of 2012. Reynolds may collapse the Graham structure and call the sub notes in order to avoid
the amortization, however at the moment it does not have the cash to do so. I believe it is unlikely Reynolds will try to call the Graham debt in
advance of the May working capital cycle. Given the size of the business and the extent of the foreign operations this business probably needs
$200 million in cash on the balance sheet at any time.

Reynolds needs to fall approximately 25% short of its estimated PF EBITDA in order to be cash flow negative.





Base Case Conservative Case Downside Case
($ millions) 2011E 2012E 2013E 2014E 2011E 2012E 2013E 2014E 2011E 2012E 2013E 2014E
Revenue 14,076 14,878 15,246 15,541 14,076 14,732 14,799 14,786 14,076 14,732 14,501 14,196
Revenue Growth (%) 6.0% 5.7% 2.5% 1.9% 6.0% 4.7% 0.5% -0.1% 6.0% 4.7% -1.6% -2.1%
EBITDA 2,527 2,741 2,898 2,937 2,527 2,563 2,512 2,493 2,527 2,563 2,167 2,104
EBITDA Margin 18.0% 18.4% 19.0% 18.9% 18.0% 17.4% 17.0% 16.9% 18.0% 17.4% 14.9% 14.8%
Capital Expenditure (642) (744) (762) (777) (642) (737) (740) (739) (642) (737) (725) (710)
EBITDA - Capex 1,885 1,997 2,135 2,160 1,885 1,827 1,772 1,754 1,885 1,827 1,442 1,394
Cash Restructuring Expenses (140) (100) - (140) (100) - (140) (100) -
Pactiv Pension Expense - (75) (75) - (75) (75) - (75) (75)
Cash Interest Expense (1,332) (1,313) (1,315) (1,332) (1,313) (1,315) (1,332) (1,313) (1,315)
Change in NWC (35) (15) (29) 0 (0) 1 0 35 30
Cash Taxes (97) (168) (214) (43) (52) (81) (43) 51 36
Free Cash Flow 393 465 527 312 232 284 312 41 70
FCF Margin % 2.6% 3.0% 3.4% 2.1% 1.6% 1.9% 2.1% 0.3% 0.5%
First Lien Debt 10,390 10,143 9,897 9,651 10,390 10,143 9,897 9,651 10,390 10,143 9,897 9,651
Total Guaranteed Debt 5,650 5,650 5,650 5,650 5,650 5,650 5,650 5,650 5,650 5,650 5,650 5,650
Non-Guaranteed Debt 1,420 1,170 1,170 1,170 1,420 1,170 1,170 1,170 1,420 1,170 1,170 1,170
Total Debt 17,459 16,963 16,717 16,471 17,459 16,963 16,717 16,471 17,459 16,963 16,717 16,471
Cash (635) (532) (750) (1,031) (635) (451) (437) (474) (635) (451) (246) (70)
Net Debt 16,824 16,431 15,967 15,440 16,824 16,513 16,280 15,996 16,824 16,513 16,471 16,401
Credit Statistics:
Total Leverage 6.9x 6.2x 5.8x 5.6x 6.9x 6.6x 6.7x 6.6x 6.9x 6.6x 7.7x 7.8x
Net Leverage 6.7x 6.0x 5.5x 5.3x 6.7x 6.4x 6.5x 6.4x 6.7x 6.4x 7.6x 7.8x
Secured Leverage 4.1x 3.7x 3.4x 3.3x 4.1x 4.0x 3.9x 3.9x 4.1x 4.0x 4.6x 4.6x
Interest Coverage 2.1x 2.2x 2.2x 1.9x 1.9x 1.9x 1.9x 1.7x 1.6x
Synergy EBITDA Shortfall
Estimate -5.0% -10.0% -15.0% -20.0% -25.0% -30.0%
Annual EBITDA $2,837 $2,695 $2,553 $2,411 $2,270 $2,128 $1,986
Less: Cash Interest (1,350) (1,350) (1,350) (1,350) (1,350) (1,350) (1,350)
Less: Cash Taxes (161) (119) (76) (33) - - -
Less: Capital Expenditures (750) (750) (750) (750) (750) (750) (750)
Free Cash Flow $576 $477 $377 $278 $170 $28 ($114)


COMPARABLE COMPANIES





PRECEDENT TRANSACTIONS




Share Market Net LTM Revenue Growth EBITDA Margin TEV/EBITDA
Shares Cap. Debt TEV Revenue EBITDA 2009A 2010A 2011E 2012E 2009A 2010A 2011E 2012E LTM 2011E 2012E
Ball Corporation 38.15 6,205 3,267 9,632 8,574 1,168 -1.7% 13.7% 13.5% 3.1% 12.9% 13.4% 13.7% 14.0% 8.2x 8.1x 7.7x
Ball is one of the world's largest beverage can producers. Leading products are metals-based beverage cans. Small aerospace segment.
Crown Holdings 34.93 5,280 3,278 8,838 8,535 1,121 -4.4% 0.0% 9.2% 3.9% 12.7% 13.1% 13.2% 13.6% 7.9x 7.7x 7.2x
Global manufacturer of steel and aluminum containers for food / beverage. ~50% of sales stem from the sale of beverage cans. Some asbestos liability.
MeadWestvaco 31.9 5,447 1,331 6,800 6,059 1,081 -6.9% 5.3% 6.0% 1.2% 14.5% 16.4% 17.4% 17.4% 6.3x 6.5x 6.4x
Produces paperboard, beverage take-home packaging and tobacco packaging.
Sealed Air Corp. 19.33 3,711 627 4,334 4,797 709 -12.4% 5.8% 16.2% 58.4% 15.7% 15.7% 14.9% 14.0% 6.1x 5.6x 3.7x
Leader in flexible plastic packaging industry, especially meat packaging
Greif, Inc. 49.72 2,349 1,411 3,917 4,248 526 -21.5% 30.3% 16.8% 8.8% 13.3% 13.5% 12.3% 12.2% 7.4x 7.4x 6.8x
Produces steel, plastic, fiber and corrugated and multi-wall containers. End-markets chemicals, lubricants oils, agriculture and pharma. Highly commoditized.
Owens-Illinois 23.37 3,838 3,831 7,823 7,268 1,195 -11.8% -0.3% 10.4% 2.4% 17.6% 18.1% 17.3% 18.0% 6.5x 6.2x 5.8x
Manufactures glass containers. 42% Europe, 28% North America. Primarily beer and soft drink bottles.
Silgan Holdings 40.22 2,807 1,302 4,110 3,385 461 -1.7% 0.2% 14.2% 3.8% 14.5% 14.6% 14.4% 14.8% 8.9x 8.1x 7.6x
Manufactures metal and plastic consumer goods packaging products. Products include food cans, vacuum closures (both metal and plastic) and plastic containers.
Median -6.9% 5.3% 13.5% 3.8% 14.5% 14.6% 14.4% 14.0% 7.4x 7.4x 6.8x
Multiple
Closed Buyer Seller Assets Price Sales EBITDA Margin Sales EBITDA
Pending International Paper Public Shareholders Temple-Inland $4,473 $3,929 $451 11.5% 1.1x 9.9x
12/1/11 Boise Pregis Hexacomb packaging $125 $110 $15 13.3% 1.1x 8.6x
11/8/11 Sonoco Products Metalmark Capital Tegrant Corporation $550 $440 $63 14.3% 1.3x 8.7x
9/1/11 Berry Plastics Rexam Closures 222 343 44 12.8% 0.6x 5.0x
5/27/11 RockTenn Public Shareholders Smurfit-Stone Container $4,060 $6,286 $592 9.4% 0.6x 6.9x
5/2/11 Reynolds Cascades Dopaco C$392 C$434 C$57 13.1% 0.9x 6.9x
3/1/11 Boise Tricor Pacific Tharco Packaging $200 $261 $27 10.3% 0.8x 7.4x
9/23/10 Graham Packaging Mid Oaks & Gallagher Liquid Container $568 $372 $67 17.9% 1.5x 8.5x
8/2/10 Amcor Limited Ball Plastic Packaging $280 $589 $53 8.9% 0.5x 5.3x
Low 8.9% 0.5x 5.0x
Mean 12.4% 0.9x 7.5x
Median 12.8% 0.9x 7.4x
High 17.9% 1.5x 9.9x


PACKAGING DEBT COMPS




PACKAGING SPREAD COMPARISON




Non-Plastic Plastic
Silgan Holdings
Inc.
Ball
Corporation
BWAY Holding
Company
Crown
Holdings Inc. Solo Cup Co.
Exopack
Holding Corp.
Berry Plastics
Corporation
Pregis
Corporation
Reynolds
Group
Holdings
Latest Financials 9/30/11 10/2/11 9/30/11 9/30/11 9/25/11 9/30/11 10/1/11 9/30/11 9/30/11
Capital Structure
First Lien Debt 1,186 1,076 509 1,584 371 352 2,392 45 10,491
Second Lien Debt - - - - - - 1,510 296 -
Senior Debt 250 2,150 205 2,184 - 235 - - 4,500
Subordinated Debt - 188 - - 325 - 582 150 2,569
HoldCo Debt - - 158 - - - 56 - -
Total Debt $1,436 $3,414 $872 $3,768 $696 $587 $4,540 $491 $17,561
Less: Cash (140) (190) (83) (479) (27) (1) (42) (21) (555)
Net Debt $1,295 $3,224 $790 $3,289 $668 $585 $4,498 $470 $17,006
EBITDA 461 1,168 140 1,121 149 90 644 64 2,480
Net Debt / EBITDA 2.8x 2.8x 5.6x 2.9x 4.5x 6.5x 7.0x 7.4x 6.9x
Total Debt / EBITDA 3.1x 2.9x 6.2x 3.4x 4.7x 6.5x 7.0x 7.7x 7.1x
Secured Debt Comps.
Security Term Loan Term Loan Term Loan Term Loan Sr. Sec. Notes Term Loan 1st Lien Notes 2nd Lien Notes Sr. Sec. Notes
Maturity Jul-17 Dec-15 Feb-18 Jun-16 Nov-13 May-17 Nov-15 Apr-13 Apr-19
Rate L + 1.75% L + 1.75% L + 3.25% L + 1.75% 10.5% L + 5.00% 8.25% E + 5.00% 7.1%
LIBOR Floor 1.25% 1.50%
Size 520 200 470.7 200 300 349 370 296 1500
Price 99.0% 99.3% 99.5% 96.3% 102.0% 98.8% 108.00% 97.0% 104.0%
Yield to Maturity 3.5% 3.0% 4.6% 2.7% 9.2% 6.8% 5.9% 9.6% 7.6%
Leverage 2.6x 0.9x 3.6x 1.4x 2.5x 3.9x 3.7x 5.4x 4.2x
Unsecured Debt Comps.
Security Senior Notes Senior Notes Senior Notes Senior Notes Sub. Notes Senior Notes Sr. Sub Notes Sr. Sub Notes Senior Notes
Maturity Jul-16 Sep-16 Jun-18 Dec-17 Feb-14 Jun-18 Mar-16 Oct-13 Apr-19
Rate 7.5% 7.13% 10.00% 7.63% 8.50% 10.00% 10.25% 12.38% 9.0%
Size 250.0 375.0 205.0 400.0 325.0 235.0 127.0 150.0 1,500.0
Price 107.5% 109.0% 107.5% 110.0% 93.0% 101.5% 96.5% 95.5% 98.0%
Yield to Maturity 5.6% 4.9% 8.5% 5.6% 12.4% 9.7% 11.3% 15.4% 9.4%
Leverage 3.1x 2.8x 5.1x 3.4x 4.7x 6.5x 7.0x 7.7x 6.0x
Next Call Date 8/15/13 9/1/14 6/15/14 5/15/13 2/3/12 6/1/14 2/3/12 2/2/12 10/15/14
Next Call Price 103.6 103.7 105.0 103.8 101.4 107.5 105.1 100.0 104.5
Silgan TL
Ball TL
Bway TL
Crown TL
Solo Sec. Nts.
Exopack TL
Berry 1st Lien
Pregis 2nd Lien
Reynolds Sr. Sec.
Silgan Notes
Ball Notes
BWAY Notes
Crown Notes
Solo Notes
Exopack Notes
Berry Notes
Pregis Notes
Reynolds Notes
-
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 7.0x 8.0x 9.0x
Y
T
M
Leverage through Tranche


SECURITY REVIEW

Pactiv Notes

2017 2027 Notes trade at 12-15%.
Pactiv is a co-borrower under Reynolds first lien credit agreement. With the exception of 4-5 principal manufacturing facilities (out of
50+ facilities total) the Pactiv assets are pledged to the first lien lenders.
Reynolds Group operating subsidiaries are not guarantors of the Pactiv Notes.
Pactivs pension is approximately $700 million underfunded and starting in 2013 the Company will need to pay $75 million per year
(these pension claims would be pari with the Notes in a restructuring).
Although this is a solid business with strong margins, in a restructuring these Notes are poorly positioned. They have been stripped of
guarantees and offer the weakest recovery of any debt in the Reynolds structure.
Buying the Pactiv notes is essentially a bet that the Company will not restructure through maturity / call.

BP II / Luxembourg II (Holdco) Debt

2016 Senior Unsecured and 2017 Senior Subordinated Notes trade at yields of 10.75% and 13.9%, respectively.
Although these notes are structurally subordinated to unsecured debt held at Reynolds Group Lux, they benefit from an intercreditor
agreement and are guaranteed by the operating subsidiaries on a senior subordinated and subordinated basis, respectively.
BP I, which indirectly owns all of the operating subsidiaries pays interest to BP II to service this debt via an intercompany note.
This debt has the benefit of being indirectly supported by the entire Reynolds operating structure (excluding Graham).
These notes are euro denominated so they may offer less liquidity.
Given that Reynolds has no other subordinated debt (excluding the Reynolds piece) it is surprising that the 2017 Notes trades more
than 300 bps wide of the 2016 Notes.
At almost 14%, the 2017 subordinated notes offer a strong yield for playing near the bottom of the capital structure. I believe this debt
is covered comfortably by enterprise value. Once Reynolds collapses the Graham structure this debt will be levered 6.5x face EBITDA
excluding synergies or 5.7x including synergies.

Graham Packaging Notes

2017 and 2018 Senior Unsecured Notes both yield 7.9%; the 2014 Senior Subordinated Notes yield 9.0% through maturity.
Graham Packaging Notes do not benefit from any downstream or cross guarantees from other Reynolds operating entities.
The only credit support Graham offers to the rest of Reynolds comes from a $2 billion first lien intercompany note with $200 million
annual amortization plus cash flow sweeps.
The remainder of Grahams RP basket is very tight (the only carveout is regular amortization hence the intercompany note).
All-in, the Graham sub. notes are leveraged 4.9x EBITDA of $555 million (including the first lien intercompany note).
2017 and 2018 notes are probably not feasible to buy (less than $40 million outstanding after recent tender).
2014 Senior Subordinated notes are callable @101.646% and 100% starting October 15, 2012 (currently trading at 102). Despite
trading above call prices, these notes offer yields in the 7-9% range depending on call timing.
Given liquidity, I do not believe the Company will call these notes in advance of their working capital spike in May. They may also
want to wait for the 2012 Pactiv Notes due in July 2012.
I view these Notes as being attractive at 102.



Reynolds Group Issuer (Luxembourg) and Senior Secured Credit Facility

Secured Debt: Yields 6.2% to 7.5% for 4.2x pre-synergy EBITDA
Unsecured Debt: Yields 8.8% to 9.7% for 6.0x pre-synergy EBITDA
Holders get surprisingly little additional yield for owning long-dated debt given continued integration risk and interest rate risk
The 2019 / 2021 holders may have to sit through 2-3 more mergers than 2016 holders and investors in those securities may be investing
in a very different company.
My favorite here are the 2016 Senior Secured Euro Notes yielding 6.5%

Call Date of Graham Subordinated Notes
1/15/12 4/15/12 7/15/12 10/15/12 1/15/13 4/15/13
Call Price 101.6% 101.6% 100.0% 100.0% 100.0%
Purchase Price 102.0%
Interest Received + Accrued 2.48% 4.94% 7.39% 9.88% 12.36% 14.79%
Cash Flow -104.5% 106.6% 109.0% 109.9% 112.4% 114.8%
IRR to Call 8.3% 9.0% 7.0% 7.5% 7.8%
Interest Rate 9.875%
Last Interest Payment 10/15/11