ANNUAL REPORT For the fiscal year ended December 31, 2010 REYNOLDS GROUP HOLDINGS LIMITED. New Zealand (Jurisdiction of incorporation or organization)

Transcription

1 ANNUAL REPORT For the fiscal year ended December 31, 2010 REYNOLDS GROUP HOLDINGS LIMITED New Zealand (Jurisdiction of incorporation or organization) Reynolds Group Holdings Limited Level Nine 148 Quay Street Auckland 1140 New Zealand Attention: Joseph Doyle Tel: Fax: ANNUAL REPORT For the fiscal year ended December 31, 2010 BEVERAGE PACKAGING HOLDINGS GROUP Luxembourg (Jurisdiction of incorporation or organization) c/o Reynolds Group Holdings Limited Level Nine 148 Quay Street Auckland 1140 New Zealand Attention: Joseph Doyle Tel: Fax:

2 Table of Contents PART I...14 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS...14 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE...15 ITEM 3. KEY INFORMATION...15 Selected Historical Consolidated Financial Data...15 Beverage Packaging Holdings Group...18 Risk Factors...22 ITEM 4. INFORMATION ON RGHL Corporate Information...57 History and Development...57 Recent Developments...59 Business Overview...60 Organizational Structure...88 Property, Plant and Equipment...88 ITEM 4A. UNRESOLVED STAFF COMMENTS...89 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS Overview...89 Accounting Principles...91 Reporting Currency...91 Segment Reporting...92 Critical Accounting Policies...92 Key Factors Influencing Our Financial Condition and Results of Operations...94 Results of Operations Differences Between the RGHL Group and Beverage Packaging Holdings Group Results of Operations Liquidity and Capital Resources Qualitative and Quantitative Disclosures about Market Risk Recently Issued Accounting Pronouncements ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES Directors of RGHL, BP I and BP II and Senior Management of RGHL Group Directors and Senior Management s Compensation Directors and Senior Management s Service Contracts Directors and Senior Management s Indemnification Agreements ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS Major Shareholders and Beneficial Ownership Related Party Transactions ITEM 8. FINANCIAL INFORMATION A. Consolidated Financial Statements and Other Financial Information B. Significant Changes ITEM 9. THE OFFER AND LISTING ITEM 10. ADDITIONAL INFORMATION Constitution of RGHL Material Contracts Exchange Controls Taxation Documents on Display Subsidiary Information ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES PART II ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS ITEM 15. CONTROLS AND PROCEDURES

3 ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT ITEM 16B. CODE OF ETHICS ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS ITEM 16F. CHANGE IN CERTIFYING ACCOUNTANT ITEM 16G. CORPORATE GOVERNANCE PART III ITEM 17. FINANCIAL STATEMENTS ITEM 18. FINANCIAL STATEMENTS

4 Certain References In this annual report, references to we, us, or our are to Reynolds Group Holdings Limited, also referred to as RGHL, and its consolidated subsidiaries, unless otherwise indicated. We describe our five segments (Evergreen, SIG, Reynolds Consumer Products, Closures and Pactiv Foodservice) as if they were our segments for all historical periods described in this annual report, unless otherwise indicated. Market Data We operate in markets for which it is difficult to obtain precise and current industry and market information. All statements made in this annual report regarding our position in the markets in which we operate, including market data, certain economics data and forecasts, were estimated or derived based upon assumptions we deem reasonable and from our own research, surveys or studies conducted by third-parties, primarily Canadean, Landell Mills, Pack-Marketing, AC Nielsen, Freedonia, Gesellschaft für Verpackungsmarkforschung, Warrick Report, Marketpower, Zenith and Euromonitor, and other industry or general publications. There is no single third party source for any of our market shares or total market size. Industry publications and surveys generally state that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. While we believe that each of these studies and publications is reliable, we have not independently verified any of the data from third-party sources, nor have we ascertained the underlying economic assumptions relied upon therein, and we make no representation as to the accuracy of such information. Similarly, we believe our internal research with respect to our markets is reliable, but it has not been verified by any independent sources and we cannot assure you that it is accurate. In particular, historical data on the food and beverage packaging manufacturing market do not have a universally recognized authoritative source. Some of the surveys and sources we rely on have been compiled by our advisors and are not publicly available and accordingly may not be considered to be as independent as other third-party sources. These sources are all more than a year old. In addition, in many cases we have made statements in this annual report regarding our markets and our position in such markets based on our experience and investigation of market conditions. We cannot assure you that any of these assumptions are accurate or correctly reflect our position in the markets in which we operate and none of our internal surveys or information has been verified by any independent sources. Certain Definitions In this annual report: 2007 Issuer refers to BP II, the issuer of the 2007 Notes Notes refers to the 2007 Senior Notes and the 2007 Senior Subordinated Notes Senior Notes refers to the 8.0% senior notes due 2016 issued by BP II on June 29, 2007, in connection with the SIG Transaction, which are secured by a second priority lien over the capital stock of BP I and a lien on certain intercompany receivables, of which million aggregate principal amount was outstanding at December 31, Senior Subordinated Notes refers to the 9.5% senior subordinated notes due 2017 issued by BP II on June 29, 2007 in connection with the SIG Transaction, which are secured by a third priority lien over the capital stock of BP I and a third priority lien on certain intercompany receivables, of which million aggregate principal amount was outstanding at December 31, Dollar Notes refers to the 7.750% Senior Secured Notes due 2016, issued by certain escrow issuers on November 5, 2009, with the obligations of such escrow issuers assumed by the Issuers on the same day, in connection with the RGHL Transaction, of which $1,125 million aggregate principal amount was outstanding at December 31, Euro Notes refers to the 7.750% Senior Secured Notes due 2016, issued by certain escrow issuers on November 5, 2009, with the obligations of such escrow issuers assumed by the Issuers on 4

5 the same day, in connection with the RGHL Transaction, of which 450 million aggregate principal amount was outstanding at December 31, Notes refers to the 2009 Dollar Notes and the 2009 Euro Notes UK Intercreditor Agreement refers to the amended intercreditor agreement that establishes the relative rights among certain creditors of the RGHL Group including lenders under the Senior Secured Credit Facilities, the trustee for the 2009 Notes, the trustee for the October 2010 Senior Secured Notes and the trustee for the 2011 Senior Secured Notes, the trustee for the 2007 Notes, RGHL, BP II, BP I and any guarantors of either the 2009 Notes, the October 2010 Senior Secured Notes, the 2011 Senior Secured Notes, the Senior Secured Credit Facilities or the 2007 Notes Bank Amendment Transaction refers to (i) the entry into the Senior Secured Credit Facilities, (ii) the full repayment of the term loans under the Original Senior Secured Credit Facilities, (iii) the repayment of the May 2010 Incremental Senior Secured Credit Facilities, (iv) the full repayment of the U.S. Tranche A Term Loans under the September 2010 Senior Secured Credit Facilities and (v) the partial payment of accrued interest and related fees and expenses Notes refers to (i) $1,000 million aggregate principal amount of 6.875% Senior Secured Notes due 2021 (the 2011 Senior Secured Notes ) and (ii) $1,000 million aggregate principal amount of 8.250% Senior Notes due 2021 (the 2011 Senior Notes ) issued by the Issuers on February 1, 2011 in connection with the 2011 Notes Transaction Notes Transaction refers to (i) the offering of the 2011 Notes and (ii) the full repayment of the U.S. Tranche D Term Loans. The remaining proceeds from the offering of the 2011 Notes have been or will be used for general corporate purposes, which may include financing future strategic acquisitions and repaying additional indebtedness. Alcoa refers to Alcoa Inc. Bev Pack Group or Bev Pack Group Successor refers to BP I and its consolidated subsidiaries, together with BP II. Bev Pack Group Predecessor refers to IP s Bev Pack Business prior to January 31, Black Liquor Credit refers to a U.S. tax credit that benefits companies that use alternative fuel mixtures to produce energy to operate their businesses. Black Liquor Credit, equal to $0.50 per gallon of alternative fuel contained in the applicable mixture, is refundable to the taxpayer. BP I refers to Beverage Packaging Holdings (Luxembourg) I S.A., a direct subsidiary of RGHL. BP I guarantees the notes and the Senior Secured Credit Facilities. BP II refers to Beverage Packaging Holdings (Luxembourg) II S.A., a sister company of BP I and a direct subsidiary of RGHL. BP II is the issuer of the 2007 Notes. BP II does not guarantee the 2011 Notes, the October 2010 Notes, the May 2010 Notes, the 2009 Notes or the Senior Secured Credit Facilities. BP III refers to Beverage Packaging Holdings (Luxembourg) III S.à r.l., a direct subsidiary of BP I and an indirect wholly owned subsidiary of RGHL. BP III guarantees the notes and the Senior Secured Credit Facilities. CHH refers to Carter Holt Harvey Limited, a New Zealand company, an indirect wholly owned subsidiary of Rank Group. Closures refers to our caps and closures segment. Closures Acquisition refers to the direct and indirect acquisition consummated on November 5, 2009, by BP III of the Closures business from an entity that is ultimately owned by our strategic owner, Graeme Hart, for a total consideration of $1,223.0 million, less the amount of outstanding consolidated indebtedness of Closure Systems International (Luxembourg) S.à r.l. and its subsidiaries under the Reynolds Facility as of the date of the closing of the Closures Acquisition. The total purchase price was adjusted, following such closing, for consolidated net cash, working capital and 5

6 benefit of earnings, resulting in an aggregate of $7.5 million paid by BP III to Closure Systems International (NZ) Limited in the form of cash and certain intercompany debt arrangements. dollars or $ refers to the lawful currency of the United States of America. Eastern Europe refers to Austria, Bulgaria, Croatia, Czech Republic, Greece, Hungary, Poland, Russia, Slovakia, Slovenia, Switzerland and Turkey. Equity Contribution refers to the equity contribution of $322 million that was made by RGHL s shareholder in connection with the Pactiv Transaction. euro or refers to the single currency of the participating Member States in the Third Stage of European Economic and Monetary Union of the Treaty Establishing the European Community, as amended from time to time. Evergreen refers to our fresh carton packaging, liquid packaging board, carton board and freesheet segment. Evergreen Acquisition refers to, collectively, the transactions completed on May 4, 2010 comprising (i) the acquisition by Reynolds Group Holdings Inc., a direct wholly owned subsidiary of BP III, of all the equity interests of Evergreen Packaging Inc. for a total consideration of $1,522.4 million (including agreed post-closing adjustments), (ii) the acquisition by SIG Combibloc Holding GmbH, an indirect wholly owned subsidiary of BP III, of all the equity interests of Evergreen Packaging (Luxembourg) S.à r.l. for a total consideration of $89.6 million (including agreed post-closing adjustments) and (iii) the acquisition by Whakatane Mill Limited, an indirect wholly owned subsidiary of BP III, of the assets and liabilities of the Whakatane Mill from CHH for a total consideration of $45.6 million (including certain post-closing adjustments). Evergreen Transaction refers to (i) the offering of the May 2010 Notes, (ii) the borrowings under the May 2010 Incremental Senior Secured Credit Facilities, (iii) the repayment of the GE Facility, (iv) the Evergreen Acquisition, (v) the other transactions related to the foregoing and (vi) the payment of fees and expenses related to the foregoing. Exchange Act refers to the U.S. Securities Exchange Act of 1934, as amended. GE Facility refers to the Credit Agreement dated as of December 17, 2003 (as amended), among Blue Ridge Paper Products Inc., the other credit parties signatory thereto, the lenders from time to time party thereto and General Electric Capital Corporation, as agent and as a lender, which provided for an aggregate of $50 million in revolving loans (including up to $5 million of swing line loans and up to $10 million of letters of credit). The GE Facility was repaid and terminated in connection with the Evergreen Transaction. guarantors refers to each member of the RGHL Group that guarantees the 2009 Notes, the 2007 Notes, and where applicable, the Senior Secured Credit Facilities, the May 2010 Notes, the October 2010 Notes and the 2011 Notes, from time to time. IASB refers to the International Accounting Standards Board. IFRS refers to International Financial Reporting Standards as issued by the IASB. Initial Evergreen Acquisition refers to the series of acquisitions of IP s Bev Pack Business by Rank Group beginning on January 31, 2007, and continuing through the subsequent three months, the associated borrowings that funded such acquisitions and the payment of related fees and expenses. IP refers to International Paper Company. Issuers or issuers refers to the US Issuers and the Lux Issuer. The Issuers are each wholly owned indirect subsidiaries of RGHL. Lux Issuer refers to Reynolds Group Issuer (Luxembourg) S.A., a société anonyme (public limited liability company) formed under the laws of Luxembourg, an indirect subsidiary of RGHL, a sister company of BP III and a wholly owned direct subsidiary of BP I. Lux Issuer is a co-issuer of the

7 Notes and the May 2010 Notes and, after assuming the obligations of certain escrow issuers, a coissuer of the 2009 Notes and the October 2010 Notes. May 2010 Incremental Senior Secured Credit Facilities refers to the $1,550 million incremental term loan facility, of which $800 million was drawn in connection with the Evergreen Transaction. The borrowings under the May 2010 Incremental Senior Secured Credit Facilities were repaid in full with proceeds from the U.S. term loans under the Senior Secured Credit Facilities. May 2010 Notes refers to the 8.5% Senior Notes due 2018 issued by the Issuers on May 4, 2010 in connection with the Evergreen Transaction, of which $1,000 million aggregate principal amount was outstanding at December 31, notes refers to the 2011 Notes, the October 2010 Notes, the May 2010 Notes, the 2009 Notes and the 2007 Notes. October 2010 Notes refers to (i) the 7.125% Senior Secured Notes due 2019 (the October 2010 Senior Secured Notes ), of which $1,500 million principal amount was outstanding at December 31, 2010 and (ii) the 9.000% Senior Notes due 2019 (the October 2010 Senior Notes ), of which $1,500 million principal amount was outstanding at December 31, The October 2010 Notes were issued by certain escrow issuers on October 15, 2010 in connection with the Pactiv Transaction, with the obligations of such escrow issuers assumed by the Issuers on November 16, Original Senior Secured Credit Facilities refers to a $1,035 million senior secured term loan facility, a 250 million senior secured term loan facility, a $120 million senior secured revolving credit facility and a 80 million senior secured revolving credit facility that we entered into in connection with the RGHL Transaction. The $1,035 million term loan and 250 million term loan under the Original Senior Secured Credit Facilities were repaid in full with proceeds from term loans under the Senior Secured Credit Facilities. Packaging Holdings refers to Packaging Holdings Limited, the indirect parent of RGHL. Packaging Holdings is a private company based in New Zealand and is wholly owned by Graeme Hart. Pactiv refers to Pactiv Corporation and, unless the context otherwise requires, its subsidiaries. Pactiv 2012 Notes refers to Pactiv s 5.875% Notes due 2012, of which $249.3 million aggregate principal amount was outstanding at December 31, Pactiv 2018 Notes refers to Pactiv s 6.400% Notes due 2018, of which $15.7 million aggregate principal amount was outstanding at December 31, Pactiv Acquisition refers to the merger of Reynolds Acquisition Corporation, a wholly owned indirect subsidiary of RGHL, with and into Pactiv, with Pactiv surviving the merger as an indirect wholly owned subsidiary of RGHL. The Pactiv Acquisition was completed on November 16, 2010 and Pactiv s stockholders received $33.25 in cash for each share of Pactiv common stock, for an aggregate purchase price for the common stock of approximately $4.5 billion. In connection with the Pactiv Acquisition, we also paid additional amounts for the cancellation of outstanding stock options and other equity-based awards. After the consummation of the Pactiv Acquisition, Pactiv and its subsidiaries became indirect subsidiaries of BP III. Pactiv Change of Control Offer refers to Pactiv s offer to purchase the Pactiv 2012 Notes, as required by the applicable indenture. The Pactiv Change of Control Offer commenced on October 20, 2010 and expired on December 6, Pursuant to the Pactiv Change of Control Offer, Pactiv purchased for cash approximately $698,000 in aggregate principal amount of tendered Pactiv 2012 Notes, with approximately $249.3 million in aggregate principal amount remaining outstanding as of December 31, Pactiv Foodservice refers to our foodservice packaging segment, which (i) consisted of our Reynolds foodservice packaging business prior to the Pactiv Acquisition and (ii) consists of our Reynolds foodservice packaging business and our Pactiv foodservice packaging business following the Pactiv Acquisition. 7

8 Pactiv Tender Offer refers to Pactiv s offer to purchase and consent solicitations with respect to the Pactiv 2018 Notes. The Pactiv Tender Offer was consummated on November 16, Pursuant to the Pactiv Tender Offer, Pactiv purchased for cash approximately $234.3 million in aggregate principal amount of tendered Pactiv 2018 Notes, with approximately $15.7 million in aggregate principal amount remaining outstanding. Pursuant to the Pactiv Tender Offer, Pactiv obtained the requisite consents to eliminate the covenant requiring Pactiv to make an offer to purchase the Pactiv 2018 Notes if a change of control triggering event occurs, as defined in the applicable indenture. Pactiv Transaction refers to (i) the offering of the October 2010 Notes, (ii) the borrowings under the September 2010 Incremental Senior Secured Credit Facilities, (iii) the partial repayment of certain Pactiv indebtedness, including the partial repurchase of the Pactiv 2012 Notes and the Pactiv 2018 Notes in connection with the Pactiv Change of Control Offer and the Pactiv Tender Offer, (iv) the Pactiv Acquisition, (v) the Equity Contribution, (vi) the other transactions related to the foregoing and (vii) the payment of fees and expenses related to the foregoing. Rank Group refers to Rank Group Limited, a private company based in New Zealand and wholly owned by Graeme Hart. Reynolds Acquisition refers to a series of acquisitions that were substantially consummated on February 29, 2008, pursuant to which our strategic owner, Graeme Hart, acquired certain businesses from Alcoa that became our Closures segment and Reynolds consumer products business following the RGHL Transaction and our Reynolds foodservice packaging business following the Reynolds Foodservice Acquisition. Reynolds Consumer Acquisition refers to the direct and indirect acquisition, consummated on November 5, 2009, by BP III of the Reynolds Consumer business from an entity that is ultimately owned by our strategic owner, Graeme Hart, for a total consideration of $1,800 million, less the amount of outstanding consolidated indebtedness of Reynolds Consumer Holdings and its subsidiaries under the Reynolds Facility as of the date of closing of the Reynolds Consumer Acquisition. The total purchase price was adjusted, following the closing of the Reynolds Consumer Acquisition, for consolidated net cash, working capital and benefit of earnings, resulting in an aggregate of $2.6 million paid in the form of intercompany debt arrangements to Reynolds Group Holdings Inc. and BP III. Reynolds Consumer Holdings refers to Reynolds Consumer Products Holdings Inc., a direct wholly owned subsidiary of Reynolds Group Holdings Inc., which is in turn a direct wholly owned subsidiary of BP III. Reynolds Consumer Products refers to our consumer products segment, which (i) consisted of our Reynolds consumer products business prior to the Pactiv Acquisition and (ii) consists of our Reynolds consumer products business and our Hefty consumer products business following the Pactiv Acquisition. Reynolds Facility refers to a senior secured term loan facility and a senior secured revolving credit facility entered into in connection with the Reynolds Acquisition, which was repaid in full and terminated as part of the RGHL Transaction. Reynolds Foodservice Acquisition refers to the indirect acquisition, consummated on September 1, 2010, by BP III of the Reynolds foodservice packaging business from entities that are ultimately owned by our strategic owner, Graeme Hart, for a total consideration of $341 million (including certain post-closing adjustments). RGHL refers to Reynolds Group Holdings Limited, the indirect parent of BP III and the issuers, among others. RGHL guarantees the notes and the Senior Secured Credit Facilities. RGHL Acquisition refers to the Closures Acquisition and the Reynolds Consumer Acquisition. RGHL Group or RGHL Group Successor refers to RGHL and its consolidated subsidiaries after the Initial Evergreen Acquisition. RGHL Group Predecessor or IP s Bev Pack Business refers to the beverage packaging business of IP before the Initial Evergreen Acquisition. 8

9 RGHL Transaction refers to (i) the offering of the 2009 Notes, (ii) the $544.0 million of cash equity contribution by RGHL to BP I, (iii) the borrowings under the Original Senior Secured Credit Facilities, (iv) the repayment of certain existing indebtedness of the RGHL Group, Closures and the Reynolds consumer products business, (v) the RGHL Acquisition, (vi) the other transactions related to the foregoing and (vii) the payment of fees and expenses related to the foregoing. SEC refers to the U.S. Securities and Exchange Commission. Senior Notes refers to the May 2010 Notes, the October 2010 Senior Notes and the 2011 Senior Notes. Senior Secured Credit Facilities refers to the $2,325 million senior secured U.S. term loans, the 250 million senior secured European term loans, the $120 million senior secured revolving credit facility and the 80 million senior secured revolving credit facility governed by the amended and restated credit agreement entered into on February 9, Senior Secured Notes refers to the 2009 Notes, the October 2010 Senior Secured Notes and the 2011 Senior Secured Notes. September 2010 Incremental Senior Secured Credit Facilities refers to the $2,020 million incremental term loan facilities, consisting of $500 million in aggregate principal amount of incremental Tranche A term loans (the U.S. Tranche A Term Loans ) and $1,520 million in aggregate principal amount of incremental Tranche D term loans (the U.S. Tranche D Term Loans ). The September 2010 Incremental Senior Secured Credit Facilities were fully drawn in connection with the Pactiv Transaction. The U.S. Tranche D Term Loans were repaid in full with proceeds from the 2011 Notes and the U.S. Tranche A Term Loans were repaid in full with proceeds from the U.S. term loans under the Senior Secured Credit Facilities. SIG refers to our aseptic carton packaging segment. SIG Acquisition refers to the acquisition of SIG by Packaging Holdings, through RGHL, its indirect wholly owned subsidiary, pursuant to a public tender offer that was concluded on May 11, 2007 and a subsequent squeeze-out of minority shareholders that was concluded on November 7, 2007, for a total consideration of 1.7 billion. SIG Combibloc refers to SIG Combibloc Group AG (formerly known as SIG Holding AG). SIG Combibloc guarantees the notes and the Senior Secured Credit Facilities. SIG Transaction refers to (i) the SIG Acquisition, (ii) the borrowings of 740 million of term loans and the establishment of an 85 million revolving credit facility under SIG s senior secured credit facilities, (iii) the borrowings of 770 million of term loans under a senior subordinated bridge facility (the 2007 Bridge Facility ), (iv) the subsequent issuance and sale of 480 million of the 2007 Senior Notes and 420 million of the 2007 Senior Subordinated Notes used to repay in full the 2007 Bridge Facility and to prepay 130 million of the term loans under the SIG s senior secured credit facilities, (v) the borrowings of 405 million by RGHL from an affiliate, (vi) the payment of fees and expenses, including financing fees, advisory fees and other transaction costs and (vii) the cancellation of 178,100 treasury shares of SIG Combibloc on February 28, Southern Europe refers to France, Italy and Spain. United States and U.S. refer to the United States of America. US Co-Issuer refers to Reynolds Group Issuer LLC, a limited liability company formed under the laws of the state of Delaware, United States and an indirect wholly owned subsidiary of BP III. US Co- Issuer is a co-issuer of the 2011 Notes and the May 2010 Notes and, after assuming the obligations of the escrow issuers, a co-issuer of the 2009 Notes and the October 2010 Notes. U.S. GAAP refers to generally accepted accounting principles in the United States of America. US Issuer refers to Reynolds Group Issuer Inc., a company incorporated under the laws of the state of Delaware, United States and an indirect wholly owned subsidiary of BP III. US Issuer is a co-issuer 9

10 of the 2011 Notes and the May 2010 Notes and, after assuming the obligations of the escrow issuers, a co-issuer of the 2009 Notes and the October 2010 Notes. US Issuers refers to US Issuer and US Co-Issuer. Western Europe refers to Belgium, Luxembourg, Denmark, Estonia, Finland, Germany, Ireland, Latvia, Lithuania, Netherlands, Norway, Sweden and the United Kingdom. Whakatane Acquisition refers to the acquisition by Whakatane Limited of the Whakatane Mill from CHH. Whakatane Limited refers to Whakatane Mill Limited, a wholly owned subsidiary of SIG Combibloc Holding GmbH. Whakatane Mill refers to the business assets and liabilities of the Whakatane paper mill that were acquired by Whakatane Limited. Presentation of Financial Information The segments that comprise the RGHL Group have not been owned, directly or indirectly, by a single company that consolidates their financial results or operates them as a single combined business for all the periods for which financial results are presented in this annual report. RGHL, through an indirect wholly owned subsidiary, acquired (i) SIG, on May 11, 2007 as part of the SIG Acquisition, (ii) our Reynolds consumer products business and Closures, on November 5, 2009, as part of the RGHL Transaction, (iii) Evergreen, on May 4, 2010, as part of the Evergreen Transaction, (iv) our Reynolds foodservice packaging business, on September 1, 2010, as part of the Reynolds Foodservice Acquisition and (v) our Hefty consumer products business and our Pactiv foodservice packaging business, on November 16, 2010, as part of the Pactiv Transaction. We are in the process of combining our Reynolds consumer products and Reynolds foodservice packaging businesses with our Hefty consumer products and Pactiv foodservice packaging businesses, respectively, to form integrated Reynolds Consumer Products and Pactiv Foodservice segments. In addition, as a result of the Initial Evergreen Acquisition, IP s Bev Pack Business became our predecessor for accounting purposes. The table below summarizes the financial statements and information that are presented herein as well as the applicable accounting standards pursuant to which such financials statements and information were prepared: Year Ended December 31, RGHL Group Financial Statements as of and for the year ended December 31, 2010 (Audited IFRS)* Financial Statements as of and for the year ended December 31, 2009 (Audited IFRS) Financial Statements as of and for the year ended December 31, 2008 (Audited IFRS)** Selected financial information as of and for the year ended December 31, 2007 (Audited IFRS)*** N/A Beverage Packaging Holdings Group Financial Statements as of and for the year ended December 31, 2010 (Audited IFRS)* Financial Statements as of and for the year ended December 31, 2009 (Audited IFRS) Financial Statements as of and for the year ended December 31, 2008 (Audited IFRS)** Selected financial information as of and for the year ended December 31, 2007 (Audited IFRS)*** N/A 10

11 Year Ended December 31, RGHL Group Predecessor North American Operations of IP s Bev Pack Business N/A N/A N/A N/A Selected financial information as of and for the year ended December 31, 2006 (Audited U.S. GAAP) N/A N/A N/A N/A Selected financial information for the one month period from January 1, 2007 to January 31, 2007 (Audited U.S. GAAP) * Includes the operations of Pactiv for the period from November 16, 2010 to December 31, ** Includes a full year of operations for Evergreen and SIG and ten months of operations for Reynolds Consumer Products, Closures and Pactiv Foodservice. *** Includes 11 months of operations for Evergreen (including five months of operations of Blue Ridge) and seven months of operations for SIG. Financial statements not included in this annual report. Accounting Principles Unless otherwise indicated, financial information in this annual report has been prepared on the basis of and in accordance with IFRS. RGHL On January 31, 2007, Rank Group commenced the acquisition of IP s Bev Pack Business. This process occurred in stages from January 31, 2007 to April 30, On May 4, 2010, Rank Group s investment in Evergreen (which was IP s Bev Pack Business prior to the Initial Evergreen Acquisition) was acquired by the RGHL Group. Through the purchase of Evergreen, the RGHL Group became the owner of the RGHL Group Predecessor. Prior to the Initial Evergreen Acquisition, the RGHL Group had no significant operations. In May 2007, RGHL acquired SIG Combibloc, a company that was listed on the SIX Swiss Exchange, pursuant to a public tender offer that was concluded on May 11, 2007 and a subsequent squeeze-out of minority shareholders that was completed on November 7, In 2008, the Reynolds Acquisition was consummated for $2.7 billion in cash. The businesses acquired in the Reynolds Acquisition included the businesses of Alcoa that became our Reynolds consumer products business and Closures segment following the RGHL Transaction and our Reynolds foodservice packaging business following the Reynolds Foodservice Acquisition. On November 5, 2009, RGHL acquired Closures and the Reynolds consumer products business. Separately on September 1, 2010, RGHL acquired the Reynolds foodservice packaging business. 11

12 On November 16, 2010, RGHL acquired Pactiv, a company that was listed on the New York Stock Exchange and Pactiv s stockholders received $33.25 in cash for each share of Pactiv common stock, for an aggregate purchase price for the common stock of approximately $4.5 billion. In connection with the Pactiv Acquisition, we also paid additional amounts for the cancellation of outstanding stock options and other equitybased awards. We are in the process of combining our Reynolds consumer products and Reynolds foodservice packaging businesses with our Hefty consumer products and Pactiv foodservice packaging businesses, respectively, to form integrated Reynolds Consumer Products and Pactiv Foodservice segments. Pactiv had historically prepared its financial statements in accordance with U.S. GAAP. Upon the consummation of the Pactiv Acquisition, Pactiv no longer separately reports its financial statements but rather its financial results are included in RGHL s financial statements in accordance with RGHL s accounting principles and policies. Our Evergreen, SIG and Closures segments and our Reynolds consumer products and Reynolds foodservice packaging businesses, which are part of our Reynolds Consumer Products and Pactiv Foodservice segments, have been under common ownership and control through entities ultimately 100% owned by Graeme Hart, our strategic owner, for over three years, but they had not been owned, directly or indirectly, by a single company that consolidated their financial results or operates them as a single combined business for that period of time. We have determined that the Evergreen Acquisition, RGHL Acquisition and Reynolds Foodservice Acquisition constituted business combinations of entities under common control. IFRS is silent on the accounting required for business combinations involving entities that are under common control, but requires that entities develop and consistently apply an accounting policy for such transactions. Accordingly, we have chosen to account for RGHL s acquisitions of Evergreen, Closures and the Reynolds consumer products and Reynolds foodservice packaging businesses, which were acquired from entities under the common control of our ultimate shareholder, Graeme Hart, using the carry-over or book value method. Under the carry-over or book value method, the business combination does not change the historical carrying value of the assets and liabilities in the business acquired. The excess of the purchase price over the consolidated carrying value of net assets acquired is recognized directly in equity. No additional goodwill separately arises as a result of the Evergreen Transaction, the RGHL Transaction and the Reynolds Foodservice Acquisition. We account for business combinations under common control from the date Graeme Hart, our strategic owner, originally obtained control of each of the businesses presented. This election has resulted in the recast of the December 31, 2007, 2008 and 2009 audited financial statements along with any other interim reporting, where the comparative period includes a period of time prior to the completion of the Evergreen Acquisition, RGHL Acquisition or Reynolds Foodservice Acquisition but subsequent to January 31, 2007 (the date of the acquisition of the Evergreen businesses by entities under the ultimate control of Graeme Hart). We account for business combinations, other than business combinations under common control, using the purchase method of accounting. Under the purchase method of accounting, the purchase price is required to be allocated to the underlying tangible and intangible assets acquired and liabilities assumed based on their respective fair market values as of the date of the acquisition, with any excess purchase price allocated to goodwill. We have accounted for the Pactiv Acquisition using the purchase method of accounting. The financial statements of the RGHL Group as of and for the years ended December 31, 2008, 2009 and 2010 included in this annual report, were audited by PricewaterhouseCoopers LLP. The combined financial statements of BP I and BP II as of and for the years ended December 31, 2008, 2009 and 2010 included in this annual report, were audited by PricewaterhouseCoopers LLP. The selected historical financial data of the RGHL Group Predecessor as of and for the year ended December 31, 2006, have been derived from the combined financial statements of IP s Bev Pack Business, which are not included in this annual report. The selected financial data of the North American operations of IP s Bev Pack Business for the period from January 1 to January 31, 2007 have been derived from the North America operations of IP s Bev Pack Business (excluding other international operations) audited combined financial statements, which are not included in this annual report. 12

13 Non-GAAP Financial Measures In this annual report, we utilize certain non-gaap financial measures and ratios, including earnings before interest, tax, depreciation and amortization ( EBITDA ) and Adjusted EBITDA, which in each case are not defined under IFRS. See Item 5. Operating and Financial Review and Prospects. These measures are presented as we believe that they and similar measures are widely used in the markets in which we operate as a means of evaluating a company s operating performance and financing structure and, in certain cases, because those measures are used to determine such compliance with covenants in our debt agreements. They may not be comparable to other similarly titled measures of other companies and are not measurements under IFRS or other generally accepted accounting principles, nor should they be considered as substitutes for the information contained in the financial statements included elsewhere in this annual report. For additional information regarding the non-gaap financial measures used by management, see note 6 to the RGHL Group s financial statements included elsewhere in this annual report. SEC Review The information in this annual report is being provided pursuant to covenants contained in the indentures governing the notes and the agreement governing the Senior Secured Credit Facilities. The indentures governing the 2011 Notes, the October 2010 Notes, the May 2010 Notes and the 2009 Notes also require us to use commercially reasonable efforts to (i) file an exchange offer registration statement with the SEC with respect to an offer to exchange the 2011 Notes, the October 2010 Notes, the May 2010 Notes and the 2009 Notes for new notes having terms substantially identical to the terms of the 2011 Notes, the October 2010 Notes, the May 2010 Notes and the 2009 Notes, and (ii) under certain circumstances, file a shelf registration statement with respect to resales of the 2009 Notes, the May 2010 Notes, the October 2010 Notes and the 2011 Notes. We did not file the required registration statement for the 2009 Notes in November 2010 and consequently have been required to pay additional interest on the 2009 Notes beginning November 5, 2010 pursuant to the registration rights agreement with respect to the 2009 Notes. Such additional interest will increase our interest expense for each period during which it is required to be paid. In addition, there can be no assurance that we will be able to file the required registration statement with respect to the May 2010 Notes by May 2011, the October 2010 Notes by October 2011 or the 2011 Notes by February In the course of the SEC review of any such registration statement, we may be required to make changes to the description of our business, our markets and other information and financial data included in this annual report. The SEC may not view certain financial data included in this annual report as having been prepared in a manner that complies in all material respects with IFRS and the regulations published by the SEC. We may agree to modify such data and other data included in this annual report even if we do not necessarily agree that it did not comply with IFRS or applicable SEC regulations. Consequently, comments by the SEC on our financial data and other information included in any such registration statement may result in modification or reformulation of the data included in this annual report and any such modification or reformulation may be significant. Forward-Looking Statements This annual report includes forward-looking statements. Forward-looking statements include statements regarding our goals, beliefs, plans or current expectations, taking into account the information currently available to our management. Forward-looking statements are not statements of historical fact. For example, when we use words such as believe, anticipate, expect, estimate, intend, should, would, could, may, will or other words that convey uncertainty of future events or outcomes, we are making forward-looking statements. We have based these forward-looking statements on our management s current view with respect to future events and financial performance. These views reflect the best judgment of our management but involve a number of risks and uncertainties which could cause actual results to differ materially from those predicted in our forward-looking statements and from past results, performance or achievements. Although we believe that the estimates and the projections reflected in the forward-looking statements are reasonable, such estimates and projections may prove to be incorrect, and our actual results may differ from those described in our forward-looking statements as a result of the following risks, uncertainties and assumptions, among others: risks related to our completed and future acquisitions, such as the risks that we may be unable to complete any future acquisitions, or that we may not be able to achieve some or all of the benefits that we expect to achieve from such completed or future acquisitions, including risks related to the integration of our acquired businesses; 13

14 risks related to the future costs of energy, raw materials and freight and the limited number of suppliers we use for those materials and services; risks related to our substantial indebtedness and our ability to service our current and future indebtedness; risks related to our hedging activities for aluminum and other raw materials which may result in significant losses and in period-to-period earnings volatility; risks related to our internal control environment which in the past have resulted in material weaknesses in our internal control over financial reporting within certain of our segments; risks related to our suppliers for raw materials and any interruption in our supply of raw materials; risks related to downturns in our target markets; risks related to increases in interest rates which would increase the cost of servicing our debt; risks related to dependence on the protection of our intellectual property and the development of new products; risks related to exchange rate fluctuations; risks related to the consolidation of our customer bases, competition and pricing pressure; risks related to the impact of a loss of any of our key manufacturing facilities; risks related to our exposure to environmental liabilities and potential changes in legislation or regulation; risks related to complying with environmental, health and safety laws or as a result of satisfying any liability or obligation imposed under such laws; risks related to changes in consumer lifestyle, eating habits, nutritional preferences and health-related and environmental concerns that may harm our business and financial performance; risks related to restrictive covenants in the notes and our other indebtedness which could adversely affect our business by limiting our operating and strategic flexibility; risks related to our dependence on key management and other highly skilled personnel; and risks related to other factors discussed or referred to in this annual report, including in Item 3. Key Information Risk Factors. The risks described above and the risks disclosed in or referred to in Item 3. Key Information Risk Factors of this annual report are not exhaustive. Other sections of this annual report describe additional factors that could adversely affect our business, financial condition or results of operations. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements referred to above and included elsewhere in this annual report. PART I ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS. Not applicable. 14

15 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE. Not applicable. ITEM 3. KEY INFORMATION. Selected Historical Consolidated Financial Data The following tables set forth the selected historical combined financial data of the RGHL Group Predecessor (prepared on a U.S. GAAP basis) and the selected historical financial data of the RGHL Group Successor (prepared on an IFRS basis). On January 31, 2007, Rank Group, through its indirect wholly owned subsidiary Evergreen Packaging New Zealand Limited, commenced the acquisition of IP s Bev Pack Business. The acquisition occurred in stages from January 31, 2007 to April 30, Prior to the Initial Evergreen Acquisition, the RGHL Group had no significant operations. We refer to IP s Bev Pack Business prior to January 31, 2007 as the RGHL Group Predecessor and the RGHL Group as the RGHL Group Successor for purposes of the presentation of the financial information below. The selected historical combined financial data of the RGHL Group Predecessor as of and for the year ended December 31, 2006 have been derived from the RGHL Group Predecessor s audited combined financial statements prepared in accordance with U.S. GAAP which are not included in this annual report. The selected historical financial data of the RGHL Group Successor as of December 31, 2007 and for the period from January 31, 2007 to December 31, 2007 have been derived from the RGHL Group Successor s audited combined financial statements which are not included in this annual report. The selected historical financial data of the RGHL Group Successor as of and for the years ended December 31, 2008, 2009 and 2010 has been derived from the RGHL Group Successor s audited financial statements included elsewhere in this annual report. Given the potential for differences between IFRS and U.S. GAAP, caution is required when comparing financial data across periods. Furthermore, certain presentations and classifications in the RGHL Group Predecessor financial statements that were prepared based on U.S. GAAP are inconsistent with the RGHL Group Successor IFRS presentations. The following data should be read in conjunction with the financial statements and related notes, and other information included elsewhere in this annual report, including Item 5. Operating and Financial Review and Prospects and Item 3. Key Information Risk Factors. IFRS Selected Financial Data The following selected financial data as of and for the years ended December 31, 2007, 2008, 2009 and 2010 are derived from the audited IFRS financial statements of the RGHL Group Successor included elsewhere in this annual report. RGHL Group Successor Year Ended December 31, 2007 * 2008 ** *** (IFRS) (In $ millions) Income Statement Revenue... $ 2,041.5 $ 6,012.8 $ 5,910.0 $ 6,774.0 Cost of sales... (1,774.6) (5,309.2) (4,691.3) (5,520.4) Gross profit , ,253.6 Other income Selling, marketing and distribution expenses... (60.0) (228.5) (210.7) (230.7) General and administration expenses... (178.2) (334.3) (366.8) (389.9) Other expenses... (40.4) (246.4) (95.9) (65.1) 15

16 RGHL Group Successor Year Ended December 31, 2007 * 2008 ** *** (IFRS) (In $ millions) Share of profits of associates and joint ventures, net of income tax (equity method) Profit from operating activities (5.7) Financial income Financial expenses... (302.8) (408.8) (513.2) (751.7) Net financial expenses... (288.4) (244.3) (492.3) (686.1) Profit (loss) before income tax... (141.1) (250.0) Income tax benefit (expense) (148.7) (85.6) Profit (loss) from continuing operations for the period... $ (111.1) $ (186.9) $ $ (83.6) * Represents 11 months of operations for the Evergreen segment and seven months of operations for the SIG segment. ** Represents a full year of operations for the SIG and Evergreen segments and 10 months of operations for the Reynolds Consumer Products, Closures and Pactiv Foodservice segments. *** Represents a full year of operations for the SIG, Evergreen, Reynolds Consumer Products, Closures and Pactiv Foodservice segments. Reynolds Consumer Products and Pactiv Foodservice include operations of our Hefty consumer products and Pactiv foodservice packaging businesses, respectively, for the period from November 16, 2010 to December 31, RGHL Group Successor As of December 31, 2007 * 2008 ** *** (IFRS) (In $ millions) Balance Sheet Data Cash and cash equivalents... $ $ $ $ Trade and other receivables ,150.2 Inventories ,280.6 Property, plant and equipment... 1, , , ,274.6 Intangible assets... 1, , , ,949.8 Other assets Total assets... 5, , , ,185.9 Trade and other payables current ,247.5 Borrowings current , Borrowings non-current... 2, , , ,699.0 Other liabilities , ,821.3 Total liabilities... $ 5,082.2 $ 6,899.8 $ 6,658.1 $15,909.1 Net assets (liabilities)... $ (69.8) $ 1,026.4 $ 1,103.4 $ * Represents balance sheet data for the SIG and Evergreen segments. ** Represents balance sheet data for the SIG, Evergreen, Reynolds Consumer Products, Closures and Pactiv Foodservice segments. *** Represents balance sheet data for the SIG, Evergreen, Reynolds Consumer Products, Closures and Pactiv Foodservice segments. Reynolds Consumer Products and Pactiv Foodservice include balance sheet data for our Hefty consumer products and Pactiv foodservice packaging businesses. 16