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Pregis Corp, et al. – ‘S-4/A’ on 1/14/10

On:  Thursday, 1/14/10, at 5:02pm ET   ·   Private-to-Public:  Document/Exhibit ¶  –  Release Delayed   ·   Accession #:  1193125-10-6538   ·   File #s:  333-162784, -01, -02, -03, -04

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 1/14/10  Pregis Corp                       S-4/A¶                 5:4.1M                                   Donnelley … Solutions/FA
          Pregis Holding II Corp
          Pregis Management Corp
          Pregis Innovative Packaging Inc.
          Hexacomb Corp

Document/Exhibit                   Description                      Pages   Size 

 1: S-4/A       Amendment No. 2 to Form S-4                         HTML   2.84M 
 5: CORRESP   ¶ Comment-Response or Other Letter to the SEC         HTML     24K 
 2: EX-5.1      Opinion of Fried, Frank, Harris, Shriver &          HTML     23K 
                          Jacobson LLP                                           
 3: EX-23.3     Consent of Ernst & Young LLP                        HTML      6K 
 4: EX-99.1     Form of Letter of Transmittal                       HTML     70K 

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As filed with the Securities and Exchange Commission on January 14, 2010

Registration No. 333–162784

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

Amendment No. 2 to

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

PREGIS CORPORATION

(Exact name of registrant as specified in its charter)

SEE TABLE OF ADDITIONAL REGISTRANT GUARANTORS

1650 Lake Cook Road, Suite 400

Deerfield, IL 60015

(847) 597-2200

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Michael T. McDonnell

1650 Lake Cook Road, Suite 400

Deerfield, IL 60015

(847) 597-2200

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Michael A. Levitt, Esq.

Fried, Frank, Harris, Shriver & Jacobson LLP

One New York Plaza

New York, New York 10004

(212) 859-8000

Approximate date of commencement of proposed exchange offer: As soon as practicable after the effective date of this Registration Statement.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

CALCULATION OF REGISTRATION FEE

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

TABLE OF ADDITIONAL REGISTRANT GUARANTORS

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The information in this prospectus is not complete and may be changed. We may not sell these securities or consummate the exchange offer until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell or exchange these securities and it is not soliciting an offer to acquire or exchange these securities in any jurisdiction where the offer, sale or exchange is not permitted.

Subject to Completion, dated January 14, 2010

Prospectus

Pregis Corporation

Exchange Offer for

€125,000,000

Second Priority Senior Secured Floating Rate Notes due 2013

We are offering to exchange up to €125,000,000 of our second priority senior secured floating rate notes due 2013, which will be registered under the Securities Act of 1933, as amended, for up to €125,000,000 of the outstanding second priority senior secured floating rate notes due 2013 that we issued on October 5, 2009. We are offering to exchange the exchange notes for the outstanding notes to satisfy our obligations contained in the registration rights agreement that we entered into when the outstanding notes were sold pursuant to Rule 144A and Regulation S under the Securities Act. The terms of the exchange notes are identical to the terms of the outstanding notes, except that the transfer restrictions, registration rights and additional interest provisions relating to the outstanding notes do not apply to the exchange notes.

Application will be made to the Irish Financial Services Regulatory Authority, as competent authority under the Prospectus Directive 2003/71/EC, for an offering circular related to the outstanding notes and the exchange notes to be approved. If and when so approved, the Irish Financial Services Regulatory Authority will only approve such offering circular as meeting the requirements imposed under Irish and European Union (“EU”) law pursuant to the Prospectus Directive 2003/71/EC. Application will be made to the Irish Stock Exchange for the outstanding notes and the exchange notes to be admitted to the Official List and trading on its regulated market. Such approval will relate only to notes which are to be admitted to trading on the regulated market of the Irish Stock Exchange or other regulated markets for purposes of Directive 93/22/EC or which are to be offered to the public in any Member State of the European Economic Area.

The exchange offer will expire at 12:00 a.m. (midnight), New York City time on                    , 2010, unless we extend it.

Broker-dealers receiving exchange notes in exchange for outstanding notes acquired for their own account through market-making or other trading activities must acknowledge that they will deliver this prospectus in any resale of the exchange notes. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of the exchange notes received in exchange for outstanding notes where such outstanding notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days after the expiration date of the exchange offer, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”

You should consider carefully the “Risk Factors” beginning on page 21 of this prospectus.

Neither the Securities and Exchange Commission, or the SEC, nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is                     , 2010.

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You should rely only on the information contained in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus does not constitute an offer to sell, or solicitation of an offer to buy, to any person in any jurisdiction in which such an offer to sell or solicitation would be unlawful. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus.

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Pregis Corporation is a Delaware Corporation. We are a wholly owned subsidiary of Pregis Holding II Corporation, a Delaware Corporation, or Pregis Holding II, which is in turn a wholly owned subsidiary of Pregis Holding I Corporation, a Delaware Corporation, or Pregis Holding I. Our principal executive offices are located in 1650 Lake Cook Road, Suite 400, Deerfield, IL 60015. Our telephone number is (847) 597-2200.

This prospectus includes trademarks and service marks owned or used by us, such as Astro-Foam^®, Astro-Cell^®, Astro-Bubble^®, Air Kraft^®, Furniture GUARD^®, Hexacomb^®, Microfoam^®, Nopaplank^TM, Polylam^TM, Polyplank^®, Jiffy^TM, Propyflex^TM, Secu-Drape^TM, Cleerpeel^TM, Steriflex^TM, Mediwell Super^TM, Mediwell Super Plus^TM, Medipeel^TM and Flexopeel^TM, as well as trademarks and service marks owned by third parties.

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RISK FACTORS

Investing in the exchange notes involves risks. You should carefully consider the risk factors set forth below as well as the other information contained in this prospectus, including the consolidated financial statements and related notes of Pregis Holding II, before purchasing the exchange notes offered pursuant to this prospectus. Any of the following risks could materially adversely affect our business, financial condition or results of operations. In such case, you may lose all or part of your original investment. Information contained in this section may be considered “forward-looking statements.” See “Cautionary Note Regarding Forward-Looking Statements” for a discussion of certain qualifications regarding such statements.

Risks Related to the Exchange Notes and Our Indebtedness

Our substantial indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations under these exchange notes.

As of September 30, 2009, after giving effect to the sale and issuance of the outstanding notes, we would have had total indebtedness of $521.1 million. In addition, we are permitted to incur $200.0 million of additional borrowings, subject to certain conditions, under the term loan portion of our senior secured credit facilities. Further, subject to compliance with the senior secured credit facilities, the indenture governing the notes will continue to allow us to incur at least $220 million (less amounts then outstanding under the senior secured credit facilities) of debt, including debt that replaces the term loans repaid with the proceeds of the sale and issuance of the outstanding notes. If such debt is incurred under the $220 million credit facility basket or in compliance with a 3:1 senior secured leverage ratio, plus an additional $50 million, such debt would constitute first priority lien obligations and could be secured on a first priority basis. Our substantial indebtedness could have important consequences to you. For example, it could:

In addition, a substantial portion of our debt bears interest at variable rates. If market interest rates increase, variable-rate debt will create higher debt service requirements, which could adversely affect our cash flow. While we may enter into agreements limiting our exposure to higher interest rates, any such agreements may not offer complete protection from this risk.

Despite current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt, including secured debt. This could further exacerbate the risks associated with our substantial leverage.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of the indenture governing the exchange notes does not, and our senior secured credit facilities and the indenture governing the senior subordinated notes do not, fully prohibit us or our subsidiaries from incurring additional

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debt, including secured debt. In addition to the first priority liens granted under our senior secured credit facilities and the senior secured floating rate notes, the indenture governing the exchange notes will allow us to grant first priority liens on all of our assets to secure certain additional other debt without ratably securing the exchange notes. In particular, under the terms of the indenture governing the exchange notes and subject to the terms of our senior secured credit facilities, we are able to incur at least $220 million of additional debt (less amounts outstanding under our senior secured credit facilities), including new debt which replaces the term loans repaid with the proceeds of the issue and sale of the outstanding notes. If such debt is incurred under the $220 million credit facility basket or in compliance with a 3:1 senior secured leverage ratio, plus an additional $50 million, such debt would constitute first priority lien obligations, could be secured on a first priority basis and would be effectively senior to the exchange notes and the subsidiary guarantees thereof to the extent of the value of the assets securing such indebtedness. Under the terms of our senior secured credit facilities, we are able to borrow up to $50 million under the revolving credit portion of such facilities and up to approximately $200 million of term loans under the accordion feature of such facilities. If new indebtedness is added to our and our subsidiaries’ current debt levels, the related risks that we and they now face could intensify and we may not be able to meet all our debt obligations, including the repayment of the exchange notes, in whole or in part.

If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the exchange notes.

Any default under the agreements governing our indebtedness, including a default under our senior secured credit facilities that is not waived by the required lenders, and the remedies sought by the holders of such indebtedness could make us unable to pay principal, premium, if any, and interest on the exchange notes and substantially decrease the market value of the exchange notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness (including our senior secured credit facilities), we could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under our senior secured credit facilities could elect to terminate their commitments, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation. If our operating performance declines, we may in the future need to seek to obtain waivers from the required lenders under our senior secured credit facilities to avoid being in default. If we breach our covenants under our senior secured credit facilities and seek a waiver, we may not be able to obtain a waiver from the required lenders. If this occurs, we would be in default under our senior secured credit facilities, the lenders could exercise their rights as described above, and we could be forced into bankruptcy or liquidation. See “Description of Other Indebtedness.”

Not all of our subsidiaries will guarantee the exchange notes, and the assets of our non-guarantor subsidiaries may not be available to make payments on the exchange notes.

The guarantors of the exchange notes will not include all of our subsidiaries. In particular, our foreign subsidiaries and all of our future unrestricted subsidiaries will not guarantee the exchange notes. Payments on the exchange notes are only required to be made by us and the subsidiary guarantors. As a result, no payments are required to be made from assets of subsidiaries that do not guarantee the exchange notes, unless those assets are transferred by dividend or otherwise to us or a subsidiary guarantor. In 2008, our non-guarantor subsidiaries had sales of $678.6 million, or 67% of our combined 2008 sales, and a loss from continuing operations before income taxes of $46.7 million. Similarly, at September 30, 2009, our non-guarantor subsidiaries had total assets of $483.9 million, or approximately 62% of our total combined assets.

In the event that any non-guarantor subsidiary becomes insolvent, liquidates, reorganizes, dissolves or otherwise winds up, holders of its debt and its trade creditors generally will be entitled to payment on their claims from the assets of that subsidiary before any of those assets are made available to us. Consequently, your claims

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in respect of the exchange notes will be effectively subordinated to all of the liabilities of our non-guarantor subsidiaries, including trade payables. As of September 30, 2009, our non-guarantor subsidiaries had $64.8 million of trade payables.

We are a holding company.

We are a holding company and we conduct substantially all of our operations through our subsidiaries. Consequently we do not have any income from operations and do not expect to generate income from operations in the future. As a result, our ability to meet our debt service obligations, including our obligations under the exchange notes, substantially depends upon our subsidiaries’ cash flow and payment of funds to us by our subsidiaries as dividends, loans, advances or other payments. In addition, the payment of dividends or the making of loans, advances or other payments to us may be subject to regulatory or contractual restrictions.

To service our debt, we will require a significant amount of cash, which may not be available to us.

Our ability to make payments on, or repay or refinance, our debt, including the exchange notes, and to fund planned capital expenditures, will depend largely upon our future operating performance. Our future performance, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. In addition, our ability to borrow funds in the future to make payments on our debt will depend on the satisfaction of the covenants in our senior secured credit facilities and our other debt agreements, including the indenture governing the exchange notes, and other agreements we may enter into in the future. In particular, we are required to maintain certain financial ratios under our senior secured credit facilities. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our senior secured credit facilities or from other sources in an amount sufficient to enable us to pay our debt, including the exchange notes, or to fund our other liquidity needs.

We cannot assure you that we will be able to refinance any of our debt, including the senior secured credit facilities, on commercially reasonable terms or at all. In particular, our senior secured credit facilities mature prior to the maturity of the notes. If we were unable to make payments or refinance our debt or obtain new financing under these circumstances, we would have to consider other options, such as:

Our senior secured credit facilities, the indenture governing our senior subordinated notes and the indenture governing the exchange notes may restrict, or market or business conditions may limit, our ability to do some of these things.

The agreements governing our debt, including the senior secured floating rate notes, the senior subordinated notes and our senior secured credit facilities, contain various covenants that impose restrictions on us that may affect our ability to operate our business and to make payments on the exchange notes.

Our existing agreements impose and future financing agreements are likely to impose operating and financial restrictions on our activities. These restrictions require us to comply with or maintain certain financial tests and ratios, including a first lien leverage covenant, and limit or prohibit our ability to, among other things:

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These restrictions on our ability to operate our business could seriously harm our business by, among other things, limiting our ability to take advantage of financing, merger and acquisition and other corporate opportunities. See “Description of Other Indebtedness” and “Description of Notes.”

Various risks, uncertainties and events beyond our control could affect our ability to comply with these covenants and maintain these financial tests and ratios. Failure to comply with any of the covenants in our existing or future financing agreements could result in a default under those agreements and under other agreements containing cross-default provisions. A default would permit lenders to accelerate the maturity of the debt under these agreements and to foreclose upon any collateral securing the debt. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations, including our obligations under the exchange notes. In addition, the limitations imposed by financing agreements on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other financing. We cannot assure you that we will be granted waivers or amendments to these agreements if for any reason we are unable to comply with these agreements, or that we will be able to refinance our debt on terms acceptable to us, or at all.

The exchange notes and the guarantees may not be enforceable because of fraudulent conveyance laws.

Our obligations under the exchange notes and the guarantors’ guarantees of the exchange notes may be subject to review under federal bankruptcy law or relevant state fraudulent conveyance laws if a bankruptcy lawsuit is commenced by or on behalf of our or the guarantors’ unpaid creditors. Under these laws, if in such a lawsuit a court were to find that, at the time we or a guarantor incurred debt, including debt represented by the guarantee, we or such guarantor:

then the court could void the exchange notes or the guarantee or subordinate the amounts owing under the exchange notes or the guarantee to our or the guarantor’s presently existing or future debt or take other actions detrimental to you.

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The measure of insolvency for purposes of the foregoing considerations will vary depending upon the law of the jurisdiction that is being applied in any such proceeding. Generally, an entity would be considered insolvent if, at the time it incurred the debt or issued the guarantee:

If the exchange notes or a guarantee is voided as a fraudulent conveyance or found to be unenforceable for any other reason, you will not have a claim against the relevant obligor and will only be our creditor or that of any guarantor whose obligation was not set aside or found to be unenforceable. In addition, the loss of a guarantee will constitute a default under the indenture governing the exchange notes, which default would cause all outstanding exchange notes to become immediately due and payable.

We believe that, at the time we and the guarantors initially incur the debt represented by the exchange notes and the guarantees, we and the guarantors:

In reaching the foregoing conclusions we have relied upon our analyses of internal cash flow projections and estimated values of our and the guarantors’ assets and liabilities. In addition, we have relied on a limitation to be contained in the guarantors’ guarantee that limits each guarantee as necessary to prevent it from constituting a fraudulent conveyance under applicable law. However, a court passing on these questions might not reach the same conclusions.

We may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture governing the exchange notes.

Upon the occurrence of certain kinds of change of control events, we will be required to offer to repurchase all exchange notes outstanding at 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of repurchase, unless all the exchange notes have been previously called for redemption. The holders of the outstanding notes, the 2005 notes and the senior subordinated notes also have this right, and holders of other debt securities that we may issue in the future may also have this right. Our failure to purchase tendered notes would constitute an event of default under the indenture governing the exchange notes, which in turn, would constitute a default under our senior secured credit facilities and the indenture governing the senior subordinated notes. In addition, the occurrence of a change of control would also constitute an event of default under our senior secured credit facilities. A default under our senior secured credit facilities would result in a default under the indenture if the lenders accelerate the debt under our senior secured credit facilities.

Therefore, it is possible that we would not have sufficient funds at the time of the change of control to make the required purchase of the exchange notes. Moreover, our senior secured credit facilities restrict, and any future indebtedness we incur may restrict, our ability to repurchase the exchange notes, including following a change of control event. As a result, following a change of control event, we would not be able to repurchase exchange notes unless we first repay all indebtedness outstanding under our senior secured credit facilities and any of our other indebtedness that contains similar provisions, or obtain a waiver from the holders of such indebtedness to permit us to repurchase the exchange notes. We may be unable to repay all of that indebtedness or obtain a

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waiver of that type. Any requirement to offer to repurchase outstanding exchange notes may therefore require us to refinance our other outstanding debt, which we may not be able to do on commercially reasonable terms, if at all. These repurchase requirements may also delay or make it more difficult for others to obtain control of us.

In addition, certain important corporate events, such as leveraged recapitalizations that would increase the level of other indebtedness, would not constitute a “Change of Control” under the indenture. See “Description of Notes—Repurchase at the Option of Holders—Change of Control.”

There is no prior public market for the exchange notes. An active public market may not develop for the exchange notes, which may hinder your ability to liquidate your investment.

The outstanding notes were issued to, and we believe those securities are owned by, a relatively small number of beneficial owners. The outstanding notes have not been registered under the Securities Act and will remain subject to restrictions on transferability until they are exchanged for the exchange notes. Although the exchange notes may be resold or otherwise transferred by the holders without compliance with the registration requirements under the Securities Act, they will constitute a new issue of securities with no established trading market. Additionally, although there is currently a trading market for the 2005 notes, the outstanding notes and the exchange notes will not trade in the same class as the 2005 notes and the outstanding notes and the exchange notes will not be fungible with the 2005 notes.

The initial purchasers (including Credit Suisse Securities (Europe) Limited, Barclays Bank PLC and Goldman Sachs International) of the outstanding notes, pursuant to a purchase agreement among us, the guarantors and the initial purchasers, dated September 24, 2009, have informed us that they intend to make a market in the exchange notes. However, the initial purchasers are not obligated to do so and may cease their market-making at any time and such market-making activity may be limited during the pendency of the exchange offer. In addition, although we have applied to list the outstanding notes and the exchange notes on the Irish Stock Exchange, we cannot assure you that such notes will become or remain listed.

The liquidity of the trading market in the exchange notes, and the market price quoted for such notes, may be adversely affected by a number of factors, including

As a result, an active trading market may not develop for the exchange notes. If no active trading market develops, you may not be able to resell your exchange notes at their fair market value or at all.

Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of these securities. We cannot assure you that the market for the exchange notes will be free from similar disruptions. Any such disruptions could have an adverse effect on noteholders.

You may have difficulty selling the outstanding notes which you do not exchange.

If you do not exchange your outstanding notes for the exchange notes offered in this exchange offer, you will continue to be subject to the restrictions on the transfer and exchange of your outstanding notes. Those transfer restrictions are described in the indenture relating to the exchange notes and in the legend contained on the outstanding notes, and arose because we originally issued the outstanding notes under exemptions from, and in transactions not subject to, the registration requirements of the Securities Act.

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In general, you may offer or sell your outstanding notes only if they are registered under the Securities Act and applicable state securities laws, or if they are offered and sold under an exemption from, or in a transaction not subject to, those requirements. After completion of this exchange offer, we do not intend to register the outstanding notes under the Securities Act.

If a large number of outstanding notes are exchanged for notes issued in the exchange offer, it may be more difficult for you to sell your unexchanged outstanding notes. In addition, upon completion of the exchange offer, holders of any remaining outstanding notes will not be entitled to any further registration rights under the registration rights agreement, except under limited circumstances.

You may face foreign exchange risks or tax consequences as a result of investing in the exchange notes.

The exchange notes will be denominated and payable in euros. If you are a U.S. investor, an investment in the exchange notes will entail foreign exchange-related risks due to, among other factors, possible significant changes in the value of the euro relative to the U.S. dollar because of economic, political and other factors over which we have no control. Depreciation of the euro against the U.S. dollar could cause a decrease in the effective yield of the exchange notes below their stated coupon rates and could result in a loss to you on a U.S. dollar basis. Investing in the exchange notes by U.S. investors may also have important tax consequences. See the more detailed discussion under “Material United States Federal Income and Estate Tax Considerations—United States Holders.”

The exchange notes will be treated as issued with original issue discount for United States federal income tax purposes.

Because the “stated redemption price at maturity” of the exchange notes exceeds their “issue price” (both as defined below under “Material United States Federal Income and Estate Tax Considerations—United States Holders—Payments of Stated Interest and Original Issue Discount”) by more than the statutory de minimis amount, the exchange notes will be treated as issued with original issue discount for United States federal income tax purposes in an amount equal to such excess. United States holders (as defined below under “Material United States Federal Income and Estate Tax Considerations—United States Holders”) will be required to include such original issue discount in their gross income as it accrues, in advance of their receipt of cash attributable to such original issue discount. See “Material United States Federal Income and Estate Tax Considerations.”

Risks Related to the Collateral

There may not be sufficient collateral to pay all or any of the exchange notes.

As further described in this prospectus, debt under our senior secured credit facilities (which we refer to as first priority lien obligations) is secured by a pledge of substantially all of our and the guarantors’ property and assets (subject to certain exceptions), 100% of the capital stock of our and the guarantors’ direct and indirect domestic subsidiaries and 66% of the capital stock or other securities of our and the guarantors’ direct foreign subsidiaries. Further, subject to compliance with the senior secured credit facilities, the indenture governing the exchange notes will continue to allow us to incur at least $220 million (less amounts then outstanding under the senior secured credit facilities) of debt, including new debt which replaces the term loans repaid with the proceeds of the offering of the outstanding notes. If such debt is incurred under the $220 million credit facility basket or in compliance with a 3:1 senior secured leverage ratio, plus an additional $50 million, such debt would constitute first priority lien obligations and could be secured on a first priority basis. In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding against us, our subsidiaries, or any future subsidiary, the first priority lien obligations will have a senior claim to the assets that are pledged as collateral before the collateral may be available for making any payments on the exchange notes. At September, 30, 2009, after giving pro forma effect to the issuance of the outstanding notes and the use of proceeds thereunder, there

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would have been no debt outstanding under our senior secured credit facilities. In addition, we are permitted to incur $200.0 million of additional borrowings, subject to certain conditions, under the term loan portion of our senior secured credit facilities. In addition to the senior secured credit facilities, other arrangements that are customarily secured, such as hedging agreements, surety bonds, letters of credit, and treasury management agreements, may be secured by first priority liens.

Further, even after holders of first priority lien obligations have been repaid in full, holders of the exchange notes will share collateral with the holders of outstanding notes not exchanged for exchange notes in this offering and 2005 notes. As of September 30, 2009, approximately $146.4 million aggregate principal amount (euro equivalent) of 2005 notes were outstanding. On October 5, 2009, we issued approximately $182.9 million aggregate principal amount (euro equivalent) of outstanding notes. We may also be able to issue additional senior secured floating rate notes in the future which would also share a second priority security interest in the collateral.

No appraisals of any collateral have been prepared in connection with this offering. The value of the collateral at any time will depend on market and other economic conditions, including the availability of suitable buyers for the collateral and our high degree of leverage. In the event of a foreclosure, liquidation, bankruptcy or similar proceeding, no assurance can be given that the proceeds from any sale or liquidation of the collateral will be sufficient to pay any of our obligations under the exchange notes, in full or at all, after first applying any proceeds from the collateral to satisfy the first priority lien obligations and then allocating any proceeds across all of the holders of second priority security interests, including the outstanding notes not exchanged for exchange notes in this offering and the 2005 notes. In addition, the book value of the collateral should not be relied on as a measure of realizable value for such assets. By its nature, portions of the collateral may be illiquid and may have no readily ascertainable market value. Accordingly, there can be no assurance that the collateral can be sold in a short period of time in an orderly manner. A significant portion of the collateral includes assets that may only be usable, and thus retain value, as part of the existing operating business of our company. Accordingly, any such sale of the collateral separate from the sale of certain of our operating businesses may not be feasible or of significant value.

We are currently exploring opportunities to enter into sale leaseback transactions relating to certain of our real estate properties, including properties in California, New York and Indiana which have been pledged as collateral for the benefit of holders of certain of our indebtedness, including the outstanding notes and the exchange notes offered hereby. See “Prospectus Summary—Recent Developments—Sale Leaseback Transactions.” If we consummate sale leaseback transactions relating to all or any of such properties, the collateral securing the outstanding notes and the exchange notes will be reduced. There can be no assurance that such sale leaseback transactions will be consummated on the terms described herein, or at all.

Holders of the exchange notes will not control decisions regarding collateral.

The holders of the first priority lien obligations control substantially all matters related to the collateral securing the exchange notes. The holders of the first priority lien obligations may cause the collateral agent to dispose of, release, or foreclose on, or take other actions with respect to, the collateral with which holders of the exchange notes may disagree or that may be contrary to the interests of holders of the exchange notes. To the extent collateral is released from securing the first priority lien obligations, the second priority liens securing the senior secured floating rate notes will also be released. If all of the first priority liens are released, and no event of default under the indenture governing the exchange notes exists, all of the second priority liens will be released. In addition, the security documents are expected to generally provide that, so long as the first priority lien obligations are in effect, the holders of the first priority lien obligations may change, waive, modify or vary the security documents without the consent of the holders of the exchange notes, provided that any such change, waiver or modification does not materially adversely affect the rights of the holders of the exchange notes and not the other secured creditors in a like or similar manner. The security agreement will prohibit second priority

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lien holders from foreclosing on the collateral as long as the first priority lien obligations remain outstanding. In addition, to the extent that the holders of the first priority liens elect not to perfect their security interest in collateral, the second priority lien will not be perfected as to these rights.

Rights of holders of the exchange notes in the collateral may be adversely affected by bankruptcy proceedings.

The right of the collateral agent to repossess and dispose of the collateral securing the exchange notes upon acceleration is likely to be significantly impaired by federal bankruptcy law if bankruptcy proceedings are commenced by or against us prior to or possibly even after the collateral agent has repossessed and disposed of the collateral. Under the U.S. Bankruptcy Code, a secured creditor, such as the collateral agent, is prohibited from repossessing its security from a debtor in a bankruptcy case, or from disposing of security repossessed from a debtor, without bankruptcy court approval. In addition, the rights of holders of exchange notes in the collateral will be subject to the rights of any holders of obligations secured by first priority liens in the collateral. Those holders of other obligations will have secured claims senior to the claims of the holders of the exchange notes with respect to the collateral. Moreover, bankruptcy law permits the debtor to continue to retain and to use collateral, and the proceeds, products, rents, or profits of the collateral, even though the debtor is in default under the applicable debt instruments, provided that the secured creditor is given “adequate protection.” The meaning of the term “adequate protection” may vary according to circumstances, but it is intended in general to protect the value of the secured creditor’s interest in the collateral and may include cash payments or the granting of additional security, if and at such time as the court in its discretion determines, for any diminution in the value of the collateral as a result of the stay of repossession or disposition or any use of the collateral by the debtor during the pendency of the bankruptcy case. In view of the broad discretionary powers of a bankruptcy court, it is impossible to predict how long payments under the exchange notes could be delayed following commencement of a bankruptcy case, whether or when the collateral agent would repossess or dispose of the collateral, or whether or to what extent holders of exchange notes would be compensated for any delay in payment of loss of value of the collateral through the requirements of “adequate protection.” Furthermore, in the event the bankruptcy court determines that the value of the collateral is not sufficient to repay all amounts due on the exchange notes, as well as all obligations secured by first priority liens on the collateral, the holders of the exchange notes would have “undersecured claims” as to the difference. Federal bankruptcy laws do not provide “adequate protection” for undersecured claims or permit the payment or accrual of interest, costs, and attorneys’ fees for “undersecured claims” during the debtor’s bankruptcy case.

Rights of holders in the collateral may be adversely affected by the “one-action rule” in the state of California.

We own real property in California, and may in the future acquire additional real property in California, which will secure the exchange notes or the related guarantees. California has an extensive and complicated body of law, commonly known as the “one-action rule,” relating to the exercise of remedies against real property collateral by a secured creditor. These rules mandate, among other things, that a creditor who holds an obligation secured, whether in whole or in part, by California real property may only enforce the obligation by commencing a judicial foreclosure case in which all California real property collateral must be included or causing the trustee under a California deed of trust to initiate a non-judicial trustee’s sale. To the extent that collateral includes real estate in California, the “one-action” rule will be applicable to any potential enforcement by the collateral agent of its rights as a secured creditor. In essence, this rule requires that a creditor may bring only a single action for the recovery of debt or the enforcement of any rights secured by a mortgage or deed of trust upon California real property.

The “one-action” rule also imposes a “fair value” limit upon the recovery of a deficiency judgment following a judicial foreclosure (as compared to a non-judicial trustee’s sale which results in a bar of any deficiency judgment). Thus, a creditor who seeks to foreclose judicially must first obtain a decree of foreclosure and then cause the sale of all encumbered realty. No later than three months after the sale of the encumbered

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realty at a public auction, the creditor must give notice of a “fair value” hearing at which the court must determine as a factual matter the “fair value” as of the date of sale of all foreclosed collateral. It is this finding of “fair value,” not the successful bid at a foreclosure sale, which is then deducted from the unpaid balance set forth in the Decree of Foreclosure to determine whether recovery of any deficiency judgment will be allowed under California law. This rule can also be used in California by a borrower as an affirmative defense to force a creditor to exercise its remedies against all collateral in a single action. Even if the borrower does not assert this defense, the one-action rule could operate as a limitation on a creditor, in that the creditor may be deemed to have made an election of remedies if the creditor improperly exercises any of its remedies against the borrower, and the creditor’s lien over the California real property collateral may be extinguished or, in some instances, recovery of the obligation may be barred altogether. The holders of the first priority lien obligations control substantially all matters related to collateral enforcement. In these circumstances, actions taken by the collateral agent pursuant to directions from the holders of the first priority lien obligations may adversely affect the rights and remedies of the holders of the exchange notes.

The California courts have also identified the so-called “sanction aspect” of the one-action rule to punish violations of the rule. As a result, certain conduct deemed to violate the statutory mandate to exhaust all real property collateral before recovery of a judgment against the obligor or obtaining recourse to assets not expressly hypothecated as collateral will trigger the “sanction aspect.” For example, a creditor who exercises an equitable right or a right of set-off will be deemed to have violated the “one-action” rule and, at a minimum, may no longer exercise its remedies against California real property collateral. Similarly, obtaining a judgment upon an obligation secured by California real property collateral, whether in the State of California or in any other state, prior to the exhaustion of all California real property collateral by a method authorized by the “one-action” rule, will result in a forced judicial waiver of all such real property collateral. In extreme instances, the California Supreme Court has held that the “sanction aspect” may also require forfeiture of any right to enforce the unpaid obligation. Notwithstanding this provision of the indenture governing the exchange notes, in the event a holder of an exchange note does exercise any remedy during such time, there remains a risk that the one-action rule could adversely affect the ability of the collateral agent or the holders of the exchange notes to exercise other remedies against the California real property collateral.

In addition, California statutes provide borrowers with the right to rescind an acceleration of a secured debt obligation by curing past defaults within specified time periods.

Rights of holders of exchange notes in the collateral may be adversely affected by the failure to perfect security interests in certain collateral.

The security interest in the collateral securing the exchange notes includes assets, both tangible and intangible, whether now owned or acquired or arising in the future. Certain security interests in the collateral may not be in place on the date of issuance of the exchange notes or may not be perfected on such date. To the extent that certain security interests are not granted or perfected on such date, we have agreed in the indenture to take actions requested by the collateral agent to grant and perfect the liens on the collateral securing the exchange notes. In addition, applicable law requires that certain property and rights acquired after the grant of a general security interest can only be perfected at the time such property and rights are acquired and identified. There can be no assurance that the trustee or the collateral agent will monitor, or that we will inform the trustee or the collateral agent of, the future acquisition of property and rights that constitute collateral, and that the necessary action will be taken to properly perfect the security interest in such after acquired collateral.

If we or any guarantor were to become subject to a bankruptcy proceeding after the issue date of the exchange notes, any mortgages or liens recorded or perfected after the issue date of the exchange notes would face a greater risk of being invalidated than if they had been recorded or perfected on the issue date. If a mortgage or lien is recorded or perfected after the issue date, it may be treated under bankruptcy law as if it were delivered to secure previously existing debt. In bankruptcy proceedings commenced within 90 days of lien perfection, a mortgage or lien given to secure previously existing debt is materially more likely to be avoided as a

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preference by the bankruptcy court than if delivered and promptly recorded on the issue date of the exchange notes. Accordingly, if we or a guarantor were to file bankruptcy after the issue date of the exchange notes and the mortgages or liens had been perfected less than 90 days before commencement of such bankruptcy proceeding, the mortgages or liens securing the exchange notes may be especially subject to challenge as a result of having been delivered after the issue date of the exchange notes. To the extent that such a challenge succeeds, you would lose the benefit of the security that the collateral was intended to provide.

Environmental laws may decrease the value of the real property collateral securing the exchange notes and may result in you being liable for environmental cleanup costs.

The exchange notes and the related guarantees are secured by liens on real property that may be subject to both known and unforeseen environmental risks, and these risks may reduce or eliminate the value of the real property as collateral for the exchange notes. The costs of complying with laws relating to the protection of the environment may be significant. See “—Risks Related to Our Business—The cost of complying with laws relating to the protection of the environment may be significant.”

Moreover, under federal and certain state environmental laws, a secured noteholder may be liable for an issuer’s environmental matters if, prior to foreclosure, the noteholder or its agents or employees actually participated in the management of the operations of the issuer, even though the environmental damage or threat was caused by a third party, a prior owner, the current owner or an operator other than that noteholder. Under federal environmental laws, “participation in management” requires actual participation in, and not merely the capacity to influence, the operations of the subject facility. This would generally require that the noteholder exercise control with respect to environmental compliance or over all or substantially all of the non-environmental operational functions. Similarly, the noteholder may become liable in various circumstances subsequent to foreclosure, including when it holds the facility or property as an investment or fails to sell, re-lease or otherwise divest itself of the property at the earliest practicable, commercially reasonable time, on commercially reasonable terms.

The equity interests and other securities securing the exchange notes will be deemed not to be collateral to the extent the pledge of such equity interests or other securities would require the filing with the SEC of separate financial statements for any subsidiaries that shall have issued such equity interests or other securities.

The indenture governing the exchange notes and the related security documents will provide that, to the extent that any rule would require the filing with the SEC (or any other governmental agency) of separate financial statements of any of our subsidiaries due to the fact that such subsidiary’s capital stock or other ownership interests or other securities secure the exchange notes, then such equity interests or other securities will automatically be deemed not to be part of the collateral to the extent necessary to not be subject to such requirement. In such event, the security documents will provide for an automatic release of the second priority liens on the appropriate amount of such capital stock or other securities. Current SEC rules could require certain subsidiaries to file separate financial statements with the SEC. As a result, the capital stock or other securities of such subsidiaries will not be part of the collateral to the extent necessary to avoid this requirement.

The collateral includes all of the capital stock or other securities of our and the guarantors’ existing or future direct or indirect domestic subsidiaries and 66% of the capital stock or other securities of our and the guarantors’ existing or future direct foreign subsidiaries, but only to the extent that the inclusion of such capital stock or other securities will mean that the par value, book value as carried by us, or market value (whichever is greatest) of any such capital stock or other securities of any subsidiary is not equal to or greater than 20% of the aggregate principal amount of senior secured floating rate notes outstanding. Because our foreign operations are held by a single intermediate foreign holding company which is our direct foreign subsidiary, the value of such holding company’s capital stock as of the date of this prospectus significantly exceeds the 20% threshold. As a result, a significant portion of such intermediate foreign holding company’s capital stock will be excluded from the

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collateral for the benefit of holders of the exchange notes. The market value of two of our other subsidiaries— Hexacomb Corporation and Pregis Innovative Packaging Inc.—also currently exceeds the 20% threshold. As a result, a significant portion of such subsidiaries’ capital stock is also excluded from the collateral for the benefit of holders of the exchange notes.

We may incur additional indebtedness secured on the same or a prior basis to the exchange notes and the related guarantees.

The indenture governing the exchange notes permits us (1) if we issue additional indebtedness, to secure such additional indebtedness with first priority liens on the collateral provided that (a) such additional indebtedness could be incurred under such indenture (e.g., using the 2:1 fixed charge coverage ratio test or the $220 million credit facility debt basket) and (b) either such indebtedness could be incurred using the $220 million credit facility debt basket or the ratio of our total secured indebtedness (other than indebtedness secured by second or third priority liens on the collateral) to our consolidated cash flow would not, upon incurrence of such additional indebtedness, exceed 3.0 to 1.0, plus an additional $50 million, and (2) to secure an unlimited principal amount of additional senior secured floating rate notes (issued after the closing date of this offering) with second priority liens on the collateral provided that the indebtedness represented by such additional notes could be incurred under such indenture. If we incur any additional indebtedness that is secured on a prior basis to the exchange notes, such notes will be effectively junior to our obligations under such additional indebtedness to the extent of the value of the collateral. Thus, such additional indebtedness, like our obligations under our senior secured credit facilities, will have a senior claim to the assets that are pledged as collateral before the collateral may be available for making any payments on the exchange notes. If we issue additional senior secured floating rate notes, the holders of such notes will be entitled to share ratably with the holders of the exchange notes (and the holders of outstanding notes not exchanged for exchange notes in this offering and the holders of 2005 notes) in any proceeds distributed in connection with any foreclosure upon the collateral or an insolvency, liquidation, reorganization, dissolution or other winding-up of our company. The foregoing considerations may have the effect of reducing or even eliminating the amount of proceeds paid to you.

Risks Related to Our Business

Our financial performance is dependent on the cost of plastic resin, the continued availability of resin, and energy costs.

The primary raw materials we use in the manufacture of some of our products are various plastic resins, primarily polyethylene, which represented approximately 55% of our 2008 material costs. Our financial performance therefore is dependent to a substantial extent on the plastic resin market.

The capacity, supply and demand for plastic resins and the petrochemical intermediates from which they are produced are subject to cyclical price fluctuations and other market disturbances, including supply shortages. The majority of the plastic resins used in our U.S. operations are currently supplied by a single source, and the majority of the plastic resins used in our European operations are currently supplied by a different single source. If our primary plastic resin suppliers in the U.S. and Europe were to become unavailable to us, we believe we would be able to obtain plastic resins from other suppliers, though there are a limited number of suppliers who manufacture plastic resins suitable for us. In the event of an industry-wide general shortage of resins used by us, or a shortage or discontinuation of certain types or grades of resin purchased from one or more of our suppliers, we may not be able to arrange for alternative sources of resin. Any such shortage may negatively impact our sales and financial condition and our competitive position versus companies that are able to better or more cheaply source resin. Furthermore, we currently purchase many of our other (non-resin) raw materials from a few key strategic suppliers. In the event of a shortage or discontinuation of such raw materials, we could experience effects similar to those caused by a resin shortage or discontinuation.

Additionally, we may be subject to significant increases in resin costs that may materially impact our financial condition. Resin costs have fluctuated significantly in recent years and may continue to fluctuate as a result of changes in natural gas and crude oil prices. Although costs declined significantly in the fourth quarter of

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2008, through the first nine months of 2008, resin costs in North America and Europe had increased 31% and 12% respectively compared to the prior year period, as measured by the respective market indices. The instability in the world markets for petroleum and in North America for natural gas could quickly affect the prices and general availability of raw materials, which could have a materially adverse impact to us. Due to the uncertain extent and rapid nature of cost increases, we cannot reasonably estimate our ability to successfully recover any cost increases. To the extent that cost increases cannot be passed on to our customers, or the duration of time lags associated with a pass-through becomes significant, such increases may have a material adverse effect on our profitability.

Freight costs are also a meaningful part of our cost structure. Over the past several years, we have experienced increased freight costs as a result of rising energy costs. Such cost increases, to the extent that they cannot be passed on to our customers or minimized through our productivity programs, may have a material adverse effect on our profitability.

We face competition in each of our businesses and our customers may not continue to purchase our products.

We face significant competition in the sale of our products. We compete with multiple companies with respect to each of our products, including divisions or subsidiaries of larger companies and foreign competitors. Certain of our competitors are substantially larger, are well established and have financial and other resources that are greater than ours and may be better able to withstand more challenging economic circumstances. Specifically, our protective packaging products compete with similar products made by other manufacturers and with a number of other packaging products that provide protection against damage to customers’ products during shipment and storage. Our primary competitor in the Protective Packaging segment is Sealed Air, while we also selectively compete with companies such as Poly Air, FP International and Storopack in North America and Fagerdala, Sansetsu and BFI in Europe. Our Specialty Packaging segment competes with a number of national and regional suppliers in each of their key products and end markets, and there are additional competitive pressures in some markets due to increasing consolidation among our customers.

We compete on the basis of a number of considerations, including price (on a price-to-value basis), service, quality, performance, product characteristics, brand recognition and loyalty, marketing, product development, sales and distribution, and ability to supply products to customers in a timely manner. Increases in our prices as compared to those of our competitors could materially adversely affect us.

The competition we face involves the following key risks:

In addition, our competitors may develop products that are superior to our products or may adapt more quickly to new technologies or evolving customer requirements. Technological advances by our competitors may lead to new manufacturing techniques and make it more difficult for us to compete. In addition, since we do not have long-term arrangements with most of our customers, these competitive factors could cause our customers to cease purchasing our products.

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If we are unable to meet future capital requirements, our businesses may be adversely affected.

We have made significant capital expenditures in our businesses in recent years to improve productivity, quality and service. We spent approximately $30.9 million, $34.6 million and $28.1 million in capital expenditures in fiscal years 2008, 2007 and 2006. As we grow our businesses, we may have to incur significant additional capital expenditures. We cannot assure you that we will have, or be able to obtain, adequate funds to make all necessary capital expenditures when required, or that the amount of future capital expenditures will not be materially in excess of our anticipated or current expenditures. If we are unable to make necessary capital expenditures, our product offerings may become dated, our productivity may decrease and the quality of our products may be adversely affected, which, in turn, could reduce our sales and profitability. In addition, even if we are able to invest sufficient resources, these investments may not generate net sales that exceed our expenses, generate any net sales at all or result in any commercially acceptable products.

Our business could be materially hurt by economic downturns.

Our business is affected by a number of economic factors, including the level of economic activity in the markets in which we operate, including, for the Protective Packaging segment, the general industrial, high tech electronics, furniture manufacturing, building products, retail, and agriculture end-markets, and for our Specialty Packaging segment, the fresh food, consumer products, dry food, medical, foodservice, convenience foods, bakery, and confectionery end-markets. The demand for our products by our customers in these end-markets depends, in part, on general economic conditions and business confidence levels. A decline in economic activity in the United States and/or Europe could materially adversely affect our financial condition and results of operations.

Difficult conditions and extreme volatility in capital, credit and commodities markets and in the global economy could have a material adverse effect on our business, financial condition and results of operations, and we do not know if these conditions will improve in the near future.

Our business, financial condition and results of operations could be materially adversely affected by the difficult conditions and extreme volatility in the capital, credit and commodities markets and in the global economy. These factors, combined with rising energy prices, declining business and consumer confidence and increased unemployment, have precipitated an economic slowdown and fears of a continuing recession in the United States and globally. The difficult conditions in these markets and the overall U.S. and global economy affect us in a number of ways. For example:

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Our business is subject to risks associated with manufacturing processes.

As of December 31, 2008, our Protective Packaging segment operated 22 manufacturing facilities in North America and 15 in Europe and our Specialty Packaging segment operated 9 manufacturing facilities in Germany, Bulgaria, the United Kingdom and Egypt. We produce substantially all of our products in these facilities, including medical supplies and foodservice products, which require special care to avoid contamination during manufacturing. Unexpected failures of our equipment and machinery, as well as contamination in the clean rooms used to manufacture our hospital supplies and foodservice products, may result in production delays, revenue loss, third party lawsuits and significant repair costs, as well as injuries to our employees. Any interruption in production capability may require us to make large capital expenditures to remedy the situation, which could have a negative impact on our profitability and cash flows.

While we maintain insurance covering our manufacturing and production facilities, including business interruption insurance, a catastrophic loss of the use of all or a portion of our facilities due to accident, fire, explosion, labor issues, weather conditions, other natural disaster or otherwise, whether short or long-term, could have a material adverse effect on us. Moreover, our business interruption and general liability insurance may not be sufficient to offset the lost revenues or increased costs that we may experience during a disruption of our operations. Furthermore, we cannot assure you that we will maintain our insurance on comparable terms in the future.

We may make acquisitions or divestitures that may be unsuccessful.

We have made, and may in the future opportunistically consider, the acquisition of other manufacturers or product lines of other businesses that either complement or expand our existing business, or the divestiture of some of our businesses. We may consider and make acquisitions both in countries that we currently operate in and in other geographies. We cannot assure you that we will be able to consummate any acquisitions or divestitures or that any future acquisitions or divestitures will be able to be consummated at acceptable prices and terms. Acquisitions or divestitures involve a number of special risks, including some or all of the following:

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A small number of stockholders own all of our common stock and control all major corporate decisions, and their interests may conflict with the interests of the holders of the notes.

AEA controls substantially all of our common stock and has the power to control our affairs and policies. AEA also controls the election of our directors, the appointment of our management and the entering into of business combinations or dispositions and other extraordinary transactions. The directors so elected have the authority, subject to the terms of our indentures and our senior secured credit facilities, to issue additional stock, implement stock repurchase programs, declare dividends and make other decisions that would be detrimental to holders of the notes.

The interests of AEA could conflict with your interests. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of AEA, as equity holders, might conflict with your interests as a noteholder. Affiliates of AEA may also have an interest in pursuing acquisitions, divestitures, financings and other transactions that, in their judgment, could enhance their equity investments, even though such transactions might involve risks to you as a noteholder.

We may be unable to respond effectively to technological changes in our industry.

We have made substantial investments to develop advanced packaging manufacturing technologies, and as a result we have a significant portfolio of industry-leading products and technologies. For instance, we believe Protective Packaging is one of only two major manufacturers of extruded engineered foam in both North America and Europe, the only producer of polypropylene sheet foam in North America and the first producer of inflatable engineered cushioning with individual cells. Our future business success will continue to depend upon our ability to maintain and enhance our technological capabilities, develop and market products and applications that meet changing customer needs and successfully anticipate or respond to technological changes on a cost-effective and timely basis. Our inability to anticipate, respond to or utilize changing technologies could have an adverse effect on our business, financial condition or results of operations.

Our business operations could be negatively impacted if we fail to adequately protect our intellectual property rights or if third parties claim that we are in violation of their intellectual property rights.

We currently rely on a combination of registered and unregistered trademarks, patents, copyrights, domain names, proprietary know-how, trade secrets and other intellectual property rights throughout the world to protect certain aspects of our business. We employ various methods to protect our intellectual property, including confidentiality and non-disclosure agreements with third parties.

While we attempt to ensure that our intellectual property and similar proprietary rights are protected, despite the steps we have taken to prevent unauthorized use of our intellectual property, third parties and current and former employees and contractors may take actions that affect our rights or the value of our intellectual property, similar proprietary rights or reputation. We have relied on, and in the future we may continue to rely on litigation to enforce our intellectual property rights and contractual rights, and, if such enforcement measures are not successful, we may not be able to protect the value of our intellectual property. Regardless of its outcome, any litigation could be protracted and costly and could have a material adverse effect on our business and results of operations.

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In addition, we face the risk of claims that we are infringing third parties’ intellectual property rights. We believe that our intellectual property rights are sufficient to allow us to conduct our business without incurring liability to third parties. However, we have received, and from time to time, may receive in the future, claims from third parties by which such third parties assert infringement claims against us and can give no assurance that claims or litigation asserting infringement by us of third parties’ intellectual property rights will not be initiated in the future. Any such claim, even if it is without merit, could be expensive and time-consuming; could cause us to cease making, using or selling certain products that incorporate the disputed intellectual property; could require us to redesign our products, if feasible; could divert management time and attention; and could require us to enter into costly royalty or licensing arrangements, to the extent such arrangements are available.

We are subject to government regulation.

We are subject to government regulation by many U.S. and non-U.S. supranational, national, federal, state and local governmental authorities. For instance, certain of our protective and specialty packaging products are subject to the U.S. Clean Air Act, U.S. Food, Drug and Cosmetic Act, U.S. Consumer Product Safety Act, U.S. Meat Products Inspection Acts, Canada Food and Drug regulations and various E.U. directives. In some circumstances, before we may sell some of our products these authorities must approve these products, our manufacturing processes and facilities. We are also subject to ongoing reviews of our products and manufacturing processes.

In order to obtain regulatory approval of various new products, we must, among other things, demonstrate to the relevant authority that the product is safe and effective for its intended uses and that we are capable of manufacturing the product in accordance with current regulations. The process of seeking approvals can be costly, time consuming and subject to unanticipated and significant delays. There can be no assurance that approvals will be granted to us on a timely basis, or at all. Any delay in obtaining, or any failure to obtain or maintain, these approvals would adversely affect our ability to introduce new products and to generate revenue from those products.

New laws and regulations may be introduced in the future that could result in additional compliance costs, seizures, confiscation, recall or monetary fines, any of which could prevent or inhibit the development, distribution and sale of our products. If we fail to comply with applicable laws and regulations, we may be subject to civil remedies, including fines, injunctions, recalls or seizures, as well as criminal penalties, which could have an adverse effect on our business, financial condition or results of operations.

The cost of complying with laws relating to the protection of the environment may be significant.

We are subject to extensive federal, state, municipal, local and foreign laws and regulations relating to the protection of human health and the environment, including those limiting the discharge of pollutants into the air and water and those regulating the treatment, storage, disposal and remediation of, and exposure to, solid and hazardous wastes and hazardous materials. Certain environmental laws and regulations impose joint and several liability on past and present owners and operators of sites, to clean up, or contribute to the cost of cleaning up sites at which contaminants were disposed or released without regard to whether the owner or operator knew of or caused the presence of the contaminants, and regardless of whether the practices that resulted in the contamination were legal at the time they occurred. In addition, under certain of these laws and regulations, a party that disposes of contaminants at a third party disposal site may also become a responsible party required to share in the costs of in the investigation or cleanup of the site.

We believe that the future cost of compliance with current environmental laws and regulations and liabilities associated with claims or known environmental conditions will not have a material adverse effect on our business. We believe our costs for compliance with environmental laws and regulations have historically averaged $1 to $2 million, annually. However, future events, such as new or more stringent environmental laws and regulations, any related damage claims, the discovery of previously unknown environmental conditions requiring response action, or more vigorous enforcement or new interpretations of existing environmental laws and regulations may require us to incur additional costs that could be material.

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Our international operations expose us to risks related to conducting business in multiple jurisdictions outside the United States.

The international scope of our operations may lead to volatile financial results and difficulties in managing our business. We generated approximately 66% of our sales outside the United States for the year ended December 31, 2008, and we may expand our international operations in the future. International sales and operations are subject to a number of risks, including:

Any of these factors, by itself or in combination with others, could materially and adversely affect our business, results of operations or financial condition.

Our exposure to currency exchange rate fluctuations results primarily from the translation exposure associated with the preparation of the consolidated financial statements of Pregis Holding II, as well as from transaction exposure associated with generating revenues and incurring expenses in different currencies. While consolidated financial statements of Pregis Holding II are reported in U.S. dollars, the financial statements of its subsidiaries outside the United States are prepared using the local currency as the functional currency and translated into U.S. dollars by applying an appropriate exchange rate. As a result, fluctuations in the exchange rate of the U.S. dollar relative to the local currencies in which our subsidiaries outside the United States report could cause significant fluctuations in our results. Our sales and expenses are recorded in a variety of currencies. During periods of a strengthening U.S. dollar, our reported international sales and earnings could be reduced because foreign currencies may translate into fewer U. S. dollars. Also, while we generally incur expenses in the same geographic markets in which our products are sold, certain corporate overhead expenses are relatively concentrated in the United States as compared with sales, so that in a time of strengthening of the U.S. dollar, our profit margins could be reduced.

While our expenses with respect to foreign operations are generally denominated in the same currency as the corresponding sales, we have transaction exposure to the extent our receipts and expenditures are not offsetting in any currency. Moreover, the costs of doing business abroad may increase as a result of adverse exchange rate fluctuations.

If we are unable to improve existing products and develop new products, our sales and industry position may suffer.

We believe that our future success will continue to depend, in part, upon our ability to make innovations in our existing products and to develop, manufacture and market new products. This will depend, in part, on the success of our research and development and engineering efforts, our ability to expand or modify our manufacturing capacity and the extent to which we convince customers and consumers to accept our new products. Historically, our ability to innovate has been a key factor in our ability to expand our product line and grow our revenue base. For example, the Protective Packaging segment recently introduced a new family of “green” products to address the growing need for sustainable packaging alternatives. These products include

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Astro-Bubble^® Green, the first introduction of recycled-content bubble. Also included in our sustainable product portfolio are Astro-Bubble^® Renew, Absolute EZ-Seam Renew™ (recycled content floor underlayment), Hefty Express^® mailers and Jiffy™ Green bubble rolls and mailer products. If we fail to successfully introduce, market and manufacture new products or product innovations and differentiate our products from those of our competitors, our ability to maintain or expand our sales and to maintain or enhance our industry position could be adversely affected, which in turn could materially adversely affect our business, financial condition or results of operations.

Our business may be interrupted due to focus on our productivity and cost reduction initiatives, and we may not be able to achieve additional significant cost savings as a result of such initiatives.

Near the end of 2007, we began implementing productivity and cost reduction initiatives pursuant to which we achieved significant cost savings. We continue to seek to achieve cost savings through such initiatives. However, there can be no assurance that we will be able to achieve additional savings from these efforts, at meaningful levels or at all, and there can be no assurance that any projections we may make regarding potential cost savings will be accurate. There are many factors which affect our ability to achieve savings as a result of productivity and cost reduction initiatives, such as difficult economic conditions, increased costs in other areas, the effects of and costs related to newly acquired entities, and mistaken assumptions. In addition, any actual savings may be balanced by incremental costs that were not foreseen at the time of the productivity or cost reduction initiatives. As a result, anticipated savings may not be achieved on the timetable desired or at all. Additionally, while we execute these initiatives to achieve these savings, it is possible that our attention may be diverted from our ongoing operations, which may have a negative impact on our ongoing operations.

We may not generate sufficient cash flow to enable us to fund our liquidity needs.

We believe that cash flow generated from operations and our existing cash balances will be adequate to meet our obligations and business requirements for the next twelve months. However, there can be no assurance that our business will generate sufficient cash flow from operations, that anticipated net sales growth and operating improvements will be realized, that existing cash balances will be sufficient or that future borrowings will be available under Pregis’s revolving credit facility in an amount sufficient to enable us to service our indebtedness or to fund our other liquidity needs. Our ability to meet our debt service obligations and other capital requirements, including capital expenditures, will depend upon our future performance which, in turn, will be subject to general economic, financial, business, competitive, legislative, regulatory and other conditions, many of which are beyond our control. Some other risks that could materially adversely affect our ability to meet our debt service obligations include, but are not limited to, risks related to increases in the cost of resin, our ability to protect our intellectual property, rising interest rates, further decline in the overall U.S. and European economies, weakening in our end markets, the loss of key personnel, our ability to continue to invest in equipment, and a decline in relations with our key distributors and dealers.

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RATIO OF EARNINGS TO FIXED CHARGES

The following table presents our historical ratio of earnings to fixed charges for the nine months ended September 30, 2009 and for each accounting period for the five year period ended December 31, 2008. For purposes of computing the ratio of earnings to fixed charges, earnings consist of income before income taxes and change in accounting principle, net of taxes, plus fixed charges, exclusive of capitalized interest. Fixed charges consist of interest expense, capitalized interest, and a portion of operating rental expense that management believes is representative of the interest component of rental expense.

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USE OF PROCEEDS

This exchange offer is intended to satisfy certain of our obligations under the registration rights agreement entered into in connection with the issuance of the outstanding notes. We will not receive any cash proceeds from the issuance of the exchange notes and have agreed to pay the expenses of the exchange offer. In consideration for issuing the exchange notes, we will receive in exchange outstanding notes in like principal amount. The form and terms of the exchange notes are identical to the form and terms of the outstanding notes, except as otherwise described herein under “The Exchange Offer—Terms of the Exchange Offer.”

The net proceeds from the offering of the outstanding notes, after deducting transaction fees and expenses, including legal, accounting and consulting fees, discounts and commissions and other expenses related to the outstanding notes, including the original issue discount for the outstanding notes and fees and expenses related to the amendment to our senior secured credit facilities, were approximately $163.9 million. We used the net proceeds from the offering of the outstanding notes, together with cash on hand, to repay in full the term loan portion of our senior secured credit facilities.

The outstanding notes surrendered in exchange for the exchange notes will be retired and canceled and cannot be reissued. Accordingly, issuance of the exchange notes will not result in any increase in our outstanding indebtedness.

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2009 on an actual basis and on an as adjusted basis to give effect to the offering of outstanding notes on October 5, 2009 and the use of proceeds thereof. This table should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this prospectus and “Use of Proceeds.”

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

Set forth below is certain historical financial and other data for Pregis. The historical financial data set forth below as of December 31, 2008 and 2007 and for the years ended December 31, 2008, 2007 and 2006 have been derived from the audited consolidated financial statements of Successor, which are included in this prospectus. The historical financial data as of December 31, 2006 and 2005 and for the period October 13 to December 31, 2005 have been derived from the audited consolidated financial statements of Successor, which are not included in this prospectus, and the historical financial data as of and for the year ended December 31, 2004 and for the period January 1, 2005 to October 12, 2005 have been derived from the audited financial statements of Predecessor, which are not included in this prospectus. The historical financial data presented below as of and for the nine-month periods ended September 30, 2008 and September 30, 2009 have been derived from the unaudited interim consolidated financial statements of Successor, which are included in this prospectus. In the opinion of management, the interim data reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of results for these periods. Operating results for the nine-month period ended September 30, 2009 are not necessarily indicative of the results that may be expected for the year ended December 31, 2009. You should read this data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included herein and Successor’s financial statements and the related notes included in this prospectus.