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March 26, 2008 |
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QUEBECOR WORLD: Seeks Nod to Pay Prepetition Wages to Managers Quebecor World Inc. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to pay 376 managers prepetition payments due under certain incentive plans for the second half of 2007, which will become due and owing on March 31, 2008. According to Michael Canning, Esq. at Arnold & Porter LLP, in New York, the Debtors maintain two annual incentive plans for its management employees: the Management Incentive Compensation Plan and the Plant Based Incentive Plan. Mr. Canning notes that these Incentive Plans are integral components of how the Debtors reward and encourage their important managerial employees. Approximately 238 employees are participants in the MICP, and 348 employees are participants in the PBIP. Of these employees, approximately 376 are owed or will be owed prepetition incentive payments. Mr. Canning says that of the 376 employees, 135 are owed under MICP and 241 under PBIP. Mr. Canning adds that 80% of these employees have earned less than US$150,000 in 2007. The total amount of incentive compensation due prepetition to the approximately 135 employees under the MICP is US$2,627,776, which, on average, represents an average incentive bonus of approximately US$20,000 per employee. Mr. Canning says that the amount of an employee's incentive bonus is based on the satisfaction of one or more performance criteria. In any given year, this criteria may include these targets: (1) Earnings Before Interests and Taxes (2) Return on Capital Employed (3) Return on Average Shareholder Equity (4) Cost of Capital (5) Earnings per Share The total amount of incentive compensation due prepetition to approximately 241 individuals under the PBIP is US$1,949,760, which, on average, represents an average incentive bonus of approximately US$8,000 per employee. According to Mr. Canning, the PBIP program is based on performance indicators that allow for the assessment of managers by using objectives set for the managers at the beginning of each year. These performance indicators address five main areas: (1) Capacity (2) Productivity (3) Quality (4) Health and Safety (5) Earnings Before Interests and Taxes (EBIT) The incentive bonus payable for each employee varies since it is expressed under the PBIP as a percentage of base salary earned by the employee and is determined based on performance measured against certain pre-established criteria. Mr. Canning believes that the failure to grant the Debtors' request with regard to these incentive payments, even for a brief period of time, could have a material adverse impact on the Debtors' businesses operations and their reorganization efforts, and would run afoul of the rehabilitative nature of the Bankruptcy Code. About Quebecor World Headquartered in Montreal, Quebec, Quebecor World Inc. (TSX: IQW)(NYSE:IQW), -- http://www.quebecorworldinc.com/ -- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. Quebecor World has approximately 27,500 employees working in more than 120 printing and related facilities in the United States, Canada, Argentina, Austria, Belgium, Brazil, Chile, Colombia, Finland, France, India, Mexico, Peru, Spain, Sweden, Switzerland and the United Kingdom. The company is an independent commercial printer in Europe with 19 facilities, operating in Austria, Belgium, Finland, France, Spain, Sweden, Switzerland and the United Kingdom. In March 2007, it sold its facility in Lille, France. Quebecor World (USA) Inc. is its wholly owned subsidiary. Quebecor World and 53 of its subsidiaries, including those in Canada, filed a petition under the Companies' Creditors Arrangement Act before the Superior Court of Quebec, Commercial Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/ -- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective Jan. 28, 2008. As of Sept. 30, 2007, Quebecor World's unaudited consolidated balance sheet showed total assets of US$5,554,900,000, total liabilities of US$3,964,800,000, preferred shares of US$175,900,000, and total shareholders' equity of US$1,414,200,000. The company has until May 20, 2008, to file a plan of reorganization in the Chapter 11 case. The Debtors' CCAA stay has been extended to May 12, 2008. (Quebecor World Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000) * * * As reported in the Troubled Company Reporter-Latin America on Feb. 13, 2008, Moody's Investors Service assigned a Ba2 rating to the US$400 million super priority senior secured revolving term loan facility of Quebecor World Inc. as a Debtor-in- Possession. The related US$600 million super priority senior secured term loan was rated Ba3 (together, the DIP facilities). The RTL's better asset value coverage relative to the TL accounts for the ratings' differential. |
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