Stone Container Settles with Stock Holders

Stone Container Corp., a subsidiary of Smurfit-Stone Container Corp., has reached a settlement in litigation brought on behalf of holders of its Series E preferred stock. As previously disclosed, the litigation includes a direct action against Stone by two holders of the stock and a class action filed on behalf of all holders of the stock. These actions have been consolidated in Delaware Chancery Court and now also include Smurfit-Stone as a defendant.

The settlement, which remains subject to court approval, provides, among other things, for the appointment of two nominees of the plaintiffs to the board of directors of Stone Container, effective yesterday. The new directors are David Gale, president of Delta Dividend Group Inc., and Mark Weissman, manager of corporate bond trading of Mariner Investment Group Inc. Gale and Weissman will not serve as directors of Smurfit-Stone or any of its subsidiaries other than Stone Container.

A majority of the members of the board of Stone Container will continue to be nominated by Smurfit-Stone. The holders of the Series E preferred stock will continue to have the right to elect two directors to Stone's board for as long as the dividends on the stock remain more than six quarters in arrears. Stone is currently unable to pay dividends on the stock as a result of covenants in the indentures governing certain of its senior indebtedness.

The first election of directors by the holders of the stock will occur at a meeting of stockholders that has been scheduled for May 17 in Chicago. Gale and Weissman are expected to stand for re-election as the two directors to be elected by the holders of this stock.

Smurfit-Stone Container Corp. was formed last November 18 by the merger of a subsidiary of Jefferson Smurfit Corp. and Stone Container Corp. As a result of the transaction, Stone Container became a subsidiary of Smurfit-Stone Container.

Smurfit-Stone is the industry's leading manufacturer of paperboard and paper-based packaging, including corrugated containers, folding cartons, and industrial bags. It is the largest producer of containerboard and kraft paper, and the largest collector, marketer, and exporter of recovered fiber. The company operates more than 300 facilities worldwide.