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In Connection With Anticipated Initial Public Offering, Company Discloses FCPA Scrutiny

Reynolds Group Holdings Limited is a New Zealand based packaging company that is to be converted to a Delaware corporation and renamed Pactiv Evergreen Inc.

Recently it announced [1] its intention to offer approximately 41 million shares in a U.S. initial public offering.

In this Registration Statement [2], the company disclosed:

“In August 2020, we identified practices in our Evergreen Packaging Shanghai business (“EPS”), which is part of our Beverage Merchandising segment, that involve acts potentially in violation of the FCPA. While our investigation into these practices (which is being conducted by external counsel, accountants, and other advisors) is not complete, we believe we have identified the occasional giving of gift cards representing relatively minor monetary values to government regulators in the People’s Republic of China (“PRC”), and/or employees of one or more state-owned enterprises in the PRC, over the course of several years. In addition, it is possible that EPS potentially violated the FCPA by engaging external consultants to interact with government regulators in the PRC to avoid potential adverse action by those regulators. The amounts involved in each scenario are immaterial, individually and in the aggregate, and we have initiated procedures to remediate such practices, including discontinuing the giving of gift cards and the engagement of any such consultants. We have also voluntarily self-reported these matters to the U.S. Department of Justice and U.S. Securities and Exchange Commission. We intend to fully cooperate with these U.S. government agencies, with the assistance of legal counsel. While we are not aware of any other acts at EPS which could be a violation of the FCPA or other similar laws, our investigation is ongoing and there can be no assurance that other violations have not been made. We are unable at this time to predict when our or the government agencies’ review of these matters will be completed or what regulatory or other consequences may result from these matters.”

The disclosure is interesting because as a non-issuer foreign company, Reynolds Group Holdings Limited is only subject to the FCPA’s anti-bribery provisions to the extent “while in the territory of the United States” the “mails or any means or instrumentality of interstate commerce” was corruptly used in connection with an improper payment scheme.