Printer R.R. Donnelley sweetens offer to buy Quebecor World
R.R. Donnelley & Sons Co. sweetened its unsolicited offer made on May 12 to buy Quebecor World Inc., the second-largest commercial printer in the U.S., which has commenced the process of concluding its Chapter 11 reorganization begun in January.
Chicago-based Donnelley, a commercial printer and provider of related services, raised the offer to include $100 million more cash and another $21.6 million in stock.
As revised in a letter sent to Quebecor on June 8, Donnelley will now pay $800 million cash and 30 million shares of its own stock, worth $416 million at the June 5 closing price. The equity component represents 15 percent of Donnelley's stock.
To give better tax consequences, Donnelley says it's now prepared to complete the acquisition through confirmation of a Chapter 11 plan rather than by a sale. With Quebecor's financing to mature in July, Donnelley is offering to pick up half of the cost of the extension, with the expense being a deduction from the purchase price.
Donnelley will also pay dollar for dollar for the $335 million in cash that Quebecor expects to have when a plan is approved.
The erstwhile buyer again says its plan is "significantly more favorable" than the currently pending standalone reorganization.
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, would receive a combination of cash, common stock and preferred stock, for a recovery estimated to be 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 recovery estimated at 10 percent to 15 percent. The plan was negotiated with the creditors' committee.
Quebecor last month received bankruptcy court approval for the disclosure statement explaining the plan. Once creditors finish voting, the bankruptcy judge in New York will hold a June 30 hearing to consider approving the plan by signing a confirmation order.
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 in September in the U.S. to gain assistance from the U.S. court for its Canadian reorganization.
R.R. Donnelley shouldn't be confused with R.H. Donnelley Corp., the Yellow Pages publisher that filed under Chapter 11 on May 28.
The Chapter 11 case in New York is In re Quebecor World (USA) Inc., 08-10152, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The Chapter 15 case is In re Quebecor World Inc., 08-13814, in the same court.