KapStone Paper And Packaging Mulls MLP Structure

KapStone Paper and Packaging Corp. (NYSE: KS) joined a list of paper companies mulling the formation of master limited partnerships for its assets.

KapStone gained more than 2 percent Thursday, while other companies in the sector moved up by a similar amount.

The Northbrook, Illinois-based company recently sought an eligibility ruling from U.S. regulators, according to Chief Executive Roger W. Stone.

"We're intrigued by the concept and are studying our options," Stone told investors in a conference call earlier Thursday.

The activist hedge fund Perry Capital said in July that by adopting the structure, Kapstone, along with International Paper Co (NYSE: IP) and Rock-Tenn Company (NYSE: RKT) could double its share price through tax savings and dividend yields.

International Paper has said the move is "theoretically possible, " while Rock-Tenn and Packaging Corp of America (NYSE: PKG) are giving serious consideration to conversions.

Publicly traded Master Limited Partnerships first surfaced in the oil industry during the early 1980s and by the middle of that decade, several forest products companies, including International Paper, had made use of the structure.

Related real estate investment trusts have also surfaced to encompass timber lands, although Kapstone buys all of its raw materials from suppliers.