Quebecor World Exits Bankruptcy Protection

MONTREAL—Freedom, despite what its name implies, most certainly comes at a stiff price. But Quebecor World can now be marked down as paid in full...and free.
Quebecor World, its affiliated debtors and debtors-in-possession have successfully emerged from bankruptcy protection under Chapter 11 of the U.S. bankruptcy code and the Companies’ Creditors Arrangement Act (CCAA) in Canada. This completes its reorganizational plans and financial restructuring, including successfully closing $800 million in exit financing facilities. At closing, Quebecor World drew about $540 million, with which it has repaid in full its debtor-in-possession credit facility.

At press time, the names of the individual entities within the organization had been changed to World Color or variations on the name of the company that existed before the landmark merger 10 years ago. The firm is expected to unveil a new branding initiative.

July proved to be a month of celebrating independence for North America’s second largest printer. Once creditors and the courts approved Quebecor World’s U.S. and Canadian plans of reorganization, it set the stage for the insolvent printer to exit protection. A July 13 meeting wrapped up the unresolved issues and, eight days later, Quebecor World realized its goal of a fresh start.

“This is an important and exciting day for the company, its customers, suppliers and employees,” remarked Jacques Mallette, president and CEO, in a prepared statement. “The restructuring and reorganizing process has made us financially healthier, and allowed us to start fresh with a strong balance sheet and a leaner cost structure.”

Quebecor World’s previously issued and outstanding multiple voting shares, redeemable first preferred shares and subordinate voting shares have been effectively cancelled, and the company has issued (in escrow) 73,285,000 common shares, 12,500,000 Class A convertible preferred shares, as well as 10,723,019 Series I warrants and 10,723,019 Series II warrants.

In accordance with the terms of the reorganization plans, the initial distribution to creditors and the listing and trading of the common shares, Series I warrants and Series II warrants on the Toronto Stock Exchange, was expected to take place within 30 days.

It was a spring of whirlwind activity for the formerly insolvent book and publication specialist. The company resisted a takeover bid by RR Donnelley (RRD), which culminated with a June 8 final offer of $1.56 billion. Two days later, unable to woo Quebecor World’s creditors with the cash and stock offer, RRD stepped aside.

Once RRD folded its hand, the U.S. government appeared to be the biggest stumbling block toward court approval. Uncle Sam claimed the restructuring plan allowed the printer to skirt $10 million in unpaid corporate taxes and another $150 million in fines stemming from environmental violations.

Ironically, the man responsible for spearheading much of Donnelley’s M&A growth, will be contributing toward the rebirth of the former Quebecor World. Ex-RRD CEO Mark Angelson is the new chairman and will be joined by a number of prominent printing and publishing figures: Tom Ryder, former chairman and CEO of Reader’s Digest; Jack Kliger, past president and CEO of Hachette Filipacchi; and Michael Allen. Mallette is expected to be the only returning board member.