Richard Perry of Perry Capital LLC has generated some immediate buzz around a plan that he believes could spike the value of the entire container board industry by restructuring companies to take advantage of the fact that some of their most valuable assets process natural resources.

“Over the past few months, we have been conducting extensive due diligence on the paper and packaging industry,” Perry writes in the thesis recently obtained by Valuewalk. “This led us to identify an opportunity that could revalue upwards the entire containerboard industry by 50-100%. In short, we believe that containerboard management teams can pursue Master Limited Partnership treatment for each company’s domestic virgin containerboard mills.”

MLPs eliminate corporate taxes, but only for certain types of income

A Master Limited Partnership (MLP) is an investment vehicle that is taxed like other partnerships or LLCs but is also traded on public exchanges. The main incentive for switching to an MLP is that income is passed straight through to unit-holders on a tax-free basis instead of getting hit with corporate taxes, but only if the IRS determines that it has qualifying income.

“The IRS has defined qualifying income for MLPs to include income and capital gains from natural resource activities, including processing, refining and marketing of oil, gas, petroleum products, coal and timber,” Perry explains.


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