R.R. Donnelley makes offer for struggling Quebecor

R.R. Donnelley & Sons Co. made a proposal yesterday to buy Quebecor World Inc. for $1.35 billion in cash and stock. Donnelley says its offer is superior to the Chapter 11 plan filed in April by Quebecor, the second-largest commercial printer in the U.S.

Donnelley's offer was in a letter stating a non-binding "indication of interest." Donnelley's offer includes $700 million cash plus 15 percent of Donnelley's stock worth $394 million at the May 11 closing price. Donnelley would also pay for the $257 million cash Quebecor is expected to have on hand when a plan confirms.

Chicago-based Donnelley, a commercial printer and provider of related services, said it's prepared to buy the business before or in connection with confirmation of a reorganization plan.

Quebecor's plan calls for giving unsecured creditors notes for 50 percent of their claims so long as claims in the class don't exceed $150 million in total. The revolving credit lenders, owed $735 million, and equipment financing lenders, owed $184 million, are to receive a combination of cash, common stock, and preferred stock, for a recovery estimated to be worth between 85 percent and 88 percent. The revolving credit includes $135.6 million that's a secured claim.

New common stock and warrants would go to the holders of $1.45 billion in unsecured notes to produce a dividend estimated to be worth 10 percent to 15 percent. The plan was negotiated with the creditors' committee.

A hearing is scheduled for May 15 to consider approving the disclosure statement explaining the Quebecor plan.

The Quebecor parent is being reorganized in Canada alongside the U.S. subsidiaries' Chapter 11 reorganizations in the U.S. In addition, the parent filed a Chapter 15 petition at the end of September in the U.S. to gain assistance from the U.S. Court for its Canadian reorganization.

The bankruptcy reorganizations began in January 2008.

The Chapter 11 case in New York is In re Quebecor World (USA) Inc., 08-10152, U.S. Bankruptcy Court, Southern District New York (Manhattan). The Chapter 15 case is In re Quebecor World Inc., 08-13814, in the same court.