Quad/Graphics to Acquire Worldcolor
Simultaneously with the closing, U.S. $140.0 million will be distributed in cash to Quad/Graphics’ existing Common Shareholders. Quad/Graphics will also provide at least U.S. $93.3 million to Worldcolor to purchase any Warrants not converted to Common Shares and to fund redemptions of or payments due on any other equity securities not converted to Common Shares. If less than $93.3 million is needed to make such purchases and redemptions, the remainder will be distributed to Worldcolor Common Shareholders in cash.
The closing of the transaction is not contingent on financing. There is U.S. $1.2 billion of committed financing from JPMorgan Chase and U.S. Bank to fund cash distributions, refinance Quad/Graphics’ existing revolving credit facility, refinance Worldcolor’s existing debt outstanding, fund expenses incurred in connection with the transaction and fund repayment of certain other Worldcolor obligations. As of September 30, 2009, the two companies had a combined unaudited debt balance of approximately U.S. $1.7 billion.
Completion of the acquisition is subject to Quad/Graphics and Worldcolor shareholder and regulatory approvals, including approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the Canadian Competition Act and the Investment Canada Act. The transaction is also subject to the approval of the Superior Court of Quebec, Commercial Division. Shareholders of Quad/Graphics holding Quad/Graphics Common Shares having more than fifty percent of the voting rights in Quad/Graphics have entered into a voting agreement in support of the proposed transaction. The acquisition also is contingent on the SEC declaring effective Quad/Graphics’ planned S-4/Proxy Circular filing.
Quad/Graphics and Worldcolor each have agreed not to solicit other offers, but may consider superior proposals from third parties in certain circumstances, subject to the match rights of the other party. The arrangement agreement also provides for the payment of a U.S. $40 million break-up fee to either party if the transaction is not completed under certain circumstances.