Quebecor World files for creditor protection
By Bernard Simon in Toronto
Financial Times
updated 9:40 a.m. CT, Mon., Jan. 21, 2008
Quebecor World, one of the world's biggest commercial printers, has filed for protection from creditors after failing to negotiate a rescue package from Quebecor, its Montreal-based media-group parent, and a Canadian private-equity fund.
Jacques Mallette, chief executive, described the move on Monday as "the best alternative for the long-term interests of the company", which employs about 28,000 people in north and south America, Europe and India.
Mr Mallette said that the filing stemmed from a combination of industry pressures, especially in Europe, as well as the company's inability to raise new capital or to complete the sale of its European operations. "The steps we initiate today will allow the company to make changes which are necessary to ensure (its) long-term viability", he added.
A deal to sell the ailing European operations collapsed last autumn after the prospective buyer, the Dutch group RSDB, pulled out. RSDB failed to win approval from its shareholders for the deal.
The European sale had been a crucial element in Quebecor's efforts to raise cash and repay debt. Just a few weeks earlier, it was forced to shelve a newly-minted refinancing plan as a result of tightening credit markets. The plan envisaged raising C$250m in new equity and US$500m in debt through a private placement.
Quebecor World's parent and Tricap Partners, a fund controlled by Brookfield Asset Management of Toronto, agreed earlier this month to a C$400m rescue package. However, the deal hinged on conditions requiring the approval of existing creditors. These conditions could not be fulfilled by Sunday morning's deadline.
Quebecor World said on Monday that it had arranged a new US$1bn financing with Credit Suisse and Morgan Stanley that will enable it to meet all current operating expenses.
The company's problems stem partly from difficulties facing the entire commercial printing industry, compounded by the company's heavy debt load and shrinking liquidity.
Competition among printers has intensified in recent years as capacity has outstripped demand, partly due to the decline of print media in the face of the internet's growth. The company abruptly parted company last month with its previous chief executive.
Quebecor World shares have been in freefall in recent months amid analysts' warnings that it might be forced to file for bankruptcy protection. |
