Magazine article Editor & Publisher

Insert Printer Vertis Merging with American Color -- in Prepackaged Bankruptcy Plan

Magazine article Editor & Publisher

Insert Printer Vertis Merging with American Color -- in Prepackaged Bankruptcy Plan

Article excerpt

Two big insert printers for newspapers -- Vertis Communications and American Color Graphics -- announced Thursday they are merging and entering a prepackaged Chapter 11 bankruptcy to reduce their debt.

Baltimore-based Vertis and Brentwood, Tenn.-based American Color said more than two-thirds of their note holders had agreed to the plan, which they added would reduce their combined debt by about $725 million before transaction fees and expenses.

Under the plan, another $240 million-plus in Vertis Holdings Mezzanine Notes "will no longer be an obligation of the company after the transaction closes," the companies said in the joint announcement.

"Importantly, the restructuring agreements and terms of the prepackaged plans call for all trade creditors, suppliers, customers and employees to receive all amounts owed to them in the ordinary course of business," Vertis and American Color added.

Note holders will exchange their bonds for $550 million in new notes and substantially all of the new equity in the combined company.

Earlier this month, Moody's Invetors Service cut Vertis' probability of default rating to 'Ca/LD' from 'Ca', meaning there was a very high probability of default on its debt. On April 16, Vertis announced it would not make a $17. …

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