Vertis Files Chapter 11, Will Merge With Competitor

By: Mark Fitzgerald

Vertis Communications, the big newspaper insert and direct-mail printer, said Tuesday it has filed for Chapter 11 bankruptcy — with a prepackaged reorganization plan that will allow it to consummate its previously announced merger with competitor American Color Graphics.

Vertis said the plan received strong support from its noteholders, with 100% of holders of mezzanine and senior subordinated debt approving the plan, and 98.3% of holders of senior notes approving.

American Color Graphics also commenced voluntary Chapter 11 proceedings with its own prepackaged plan. The company said more than 95.3% of noteholders had voted to approve the plan.

Vertis said the plan will reduce debt of the combined companies by $1 billion, and that it expects all allowed claims of trade creditors to be paid in full.

“The restructuring under the plan will allow the company to dramatically reduce debt and interest cost, complete its reorganization and merger in just a few short months, and refocus investments into the business,” Vertis Chairman and CEO Mike DuBose said in a statement.

DuBose said the merger should be completed by the end of the summer.

The agreement merges two of the largest printing and premedia companies in North America. Vertis said under the merger, the new companiy will be able to offer “an unprecedented scope of premedia and workflow solutions to their customers,” in addition to continuing its insert manufacturing.

As previously announced, Vertis has obtained $380 million in debtor-in-possession financing from GE Commercial Finance.

It said the financing will provide the company with sufficient liquidity until the prepackaged plan is consummated. Vertis said it has also obtained commitments for $650 million in exit financing, consisting of $250 million from GE and a $400 million from Morgan Stanley Senior Funding Inc.

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