Quad/Graphics Closes Its $1.5 Billion Debt Refinancing

SUSSEX, WI—Jul 26, 2011—Quad/Graphics announced that it has closed its previously announced offering of $1.5 billion, consisting of a five-year $850 million revolving line of credit; a five-year, $450 million bank term loan A; and a seven-year, $200 million term loan B.

“Our strong cash flow and progress on the Worldcolor integration have enabled us to make significant progress in our efforts to deleverage over the past year,” said John Fowler, Quad/Graphics executive vice president and chief financial officer. “Our improved balance sheet metrics combined with improvements in the credit markets made this an ideal time to refinance.

“We are pleased with the strong support we received from both existing and new bank partners, as well as investors in the institutional term loan market. As a result of this support, the debt was substantially oversubscribed, which allowed us to tighten the original issuance discount and LIBOR floor, as well as create more capacity under the bank portion of the agreement,” Fowler continued.

“This comprehensive refinancing has provided us additional financial flexibility, increased our borrowing capacity under our revolver, extended our maturities and reduced our cost of borrowing. We believe the new credit facility provides a solid financing structure to support our future growth plans.”

The company estimates that the pricing under the new agreement will reduce interest payments by $16-20 million annually, with a payback on the costs to refinance the agreement at well less than one year. At its current leverage ratio, the borrowing spread on both the revolver and term loan A is LIBOR +225 basis points. The borrowing spread on the term loan B is LIBOR +300 basis points, subject to a 100 basis point LIBOR floor.

Quad/Graphics intends to use the $650 million net proceeds from the new term loans, as well as approximately $170 million borrowed under the new revolver, to pay off its existing term loans and revolver borrowings.

J.P. Morgan Securities; Merrill Lynch; Pierce, Fenner & Smith; U.S. Bank National Association; PNC Capital Markets; and SunTrust Robinson Humphrey were the lead arrangers of the credit facilities.

About Quad/Graphics
Quad/Graphics (NYSE: QUAD) is a global provider of print and related multichannel solutions for consumer magazines, special interest publications, catalogs, retail inserts/circulars, direct mail, books, directories, and commercial and specialty products, including in-store signage. Headquartered in Sussex, Wis. (just west of Milwaukee), the Company has approximately 24,000 full-time equivalent employees working from more than 60 print-production facilities as well as other support locations throughout the United States, Canada, Latin America and Europe. As a printing industry innovator, Quad/Graphics is redefining the power of print in today's multimedia world by helping its clients use print as the foundation of multichannel communications strategies to drive their top-line revenues.

Source: Quad/Graphics.