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Vertis Opts for Prepackaged Chapter 11

December 2010

BALTIMORE—Vertis Holdings has elected to complete its previously announced refinancing plan through a voluntary, prepackaged Chapter 11 filing. The recapitalization is expected to strengthen Vertis' capital structure by reducing the company's total debt by approximately 60 percent, or $700 million, while substantially lowering interest costs, extending maturities and increasing liquidity.

Vertis has secured a commitment for a $200 million debtor-in-possession (DIP) revolving credit facility from GE Capital. The DIP facility will provide Vertis the necessary financing to complete the confirmation of its plan of reorganization within 45 to 60 days and ensure that it is able to uphold its commitments to clients, employees and suppliers.

The company has already received commitments for $600 million in financing to be implemented under the plan of reorganization, including a $425 million term loan from Morgan Stanley Senior Funding and a $175 million revolving credit facility from GE Capital. Vertis has also received commitments for up to $100 million of new common equity, pursuant to its previously announced private placement and the associated backstops.

Vertis has filed a series of first day motions to allow it to continue to operate in the ordinary course during the confirmation process. To this end, Vertis is seeking approval in the United States Bankruptcy Court for Southern District of New York to continue the payment of wages, salaries and other employee benefits, and to uphold all of its commitments under existing client programs. Additionally, the company's plan of reorganization contemplates paying suppliers in full for all obligations. PI


 

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