Vertis Amends Terms of Note Exchange Offer, Floats Chapter 11 Reorganization Plan

BALTIMORE—Nov. 2, 2010—Vertis Holdings, Inc. announced that it has amended the terms of its previously announced exchange offers and taken additional steps to complete the comprehensive refinancing of substantially all of its outstanding secured and unsecured debt. If this refinancing is successfully completed, Vertis will reduce its total debt by more than $700 million, or approximately 60 percent, allowing it to compete more effectively in the industry.

The refinancing will better position Vertis for long-term growth by giving it the financial flexibility to make additional investments and to continue aligning the business with evolving marketplace trends and clients’ needs.

Holders of Vertis’ Senior Pay-in-Kind Notes due 2014 and Senior Secured Second Lien Notes due 2012 are being offered the opportunity to exchange their existing debt for equity only (the “Exchange Offers”), as compared to previous offers of cash, new senior secured notes and equity.

Vertis also announced that it has secured commitments for $600 million of debt and expects to have approximately $500 million of debt outstanding upon completion of the refinancing. GE Capital has committed to provide a $175 million Revolving Credit Facility and Morgan Stanley Senior Funding, Inc. has committed to provide a $425 million Term Loan.

Additionally, eligible Second Lien Note holders will have the opportunity to acquire up to $100 million in additional Vertis equity, the proceeds of which would be used to further reduce the company’s debt. Certain of such holders have agreed to purchase their allocated share of the equity, plus any such equity not purchased by other holders.

Lastly, Vertis has developed an alternate path to ensure the refinancing is completed on a timely basis. Concurrent with the Exchange Offers, Vertis is soliciting acceptances of a pre-packaged Chapter 11 reorganization plan. If Vertis does not obtain acceptable participation in the Exchange Offers from its Senior PIK Note holders and Second Lien Note holders, but does obtain the necessary acceptances for the Plan of Reorganization—a lower voting threshold—Vertis intends to begin Chapter 11 proceedings to complete the refinancing.

Vertis would file a voluntary pre-packaged Chapter 11 petition only if it concludes that a court-supervised process is the most efficient means to successfully complete the recapitalization while protecting its stakeholders’ long-term interests. The GE Capital and Morgan Stanley Senior Funding, Inc. commitments will allow the company to enter the process with funding in place to complete the reorganization within 45 to 60 days of filing and emerge as a well-capitalized company. The plan of reorganization contemplates that the company will honor in full all commitments to employees, clients, suppliers and other business partners, without disruption.

Timetable

The Exchange Offers will expire at 12:00 a.m., New York City time, on Dec. 1, 2010, unless extended by Vertis. The Exchange Offers are subject to the terms and conditions set forth in the Offering Memorandum and Disclosure Statement and the related letter of transmittal, each dated Nov. 1, 2010.

Solicitation for Potential Voluntary Pre-Packaged Chapter 11 Reorganization

Concurrently with the Exchange Offers, Vertis is soliciting votes on its Plan of Reorganization. Vertis has made no decision at this time to commence Chapter 11 proceedings. However, if it does not obtain acceptable levels of participation in the Exchange Offers, but does receive sufficient acceptances of its Plan of Reorganization, Vertis will pursue its restructuring in Chapter 11.

A Chapter 11 plan of reorganization can be confirmed if either the holders of the Second Lien Notes or the Senior PIK Notes vote to accept the plan, not including the votes of affiliates. A class of creditors is deemed to accept a Chapter 11 plan if at least one-half in number of the creditors within the class, who hold at least two-thirds in dollar amount of claims in the class, vote to accept the plan, counting only those who actually vote. Dissenting and abstaining creditors will be bound by the terms of the plan if this voting threshold is met.

The proposed economic terms of the Plan of Reorganization are substantially similar to the proposed economic terms of the Exchange Offers. In particular, holders of Second Lien Notes will be entitled to their pro rata share of 96.25% of the equity in reorganized Vertis, subject to dilution on account of equity distributed by reorganized Vertis in exchange for the investment of up to $100 million described above. Holders of Senior PIK Notes will be entitled to their pro rata share of 3.75% of the equity in reorganized Vertis, subject to the same dilution. Existing equity interests in Vertis will be cancelled. All other creditors will be left unimpaired under the plan. Accordingly, under the plan, all obligations to suppliers, vendors, clients, and employees will be paid in full in the ordinary course of business. If Vertis files chapter 11 pursuant to the plan, it will request immediate authority to honor such obligations without delay or disruption.

For additional information, Vertis’ vendors may call (877) 489-1434 or email VertisVendorSupport@fticonsulting.com.

About Vertis
Vertis is a results-driven marketing communications company that delivers inventive advertising, direct marketing and interactive solutions to prominent brands across North America. Our deep industry knowledge and extensive range of offerings—including integrated data solutions, digital program management systems, creative services, world-class print and mail production, logistics, out-of-home and business process outsourcing—are used to deliver superior program performance that drives bottom line results for our clients.

Source: Company press release.