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January 28, 2008 |
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QUEBECOR WORLD: Wants Access to Two Lenders' Cash Collateral Quebecor World Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for permission to use certain collateral pledged to the prepetition secured lenders. The prepetition secured lenders are group lenders led by Royal Bank of Canada and another group of lenders led by Societe Generale (Canada). The Debtors tell the Court that they do not have sufficient liquidity to pay obligations that either are currently due or are expected to become due in early 2008, proposed counsel Michael J. Canning, Esq., at Arnold & Porter, LLP, in New York, relates. RBC Lenders have indicated that it will not provide any further advances from a US$750,000,000 prepetition credit agreement because the Debtors have not satisfied conditions and refinancing milestones set by the RBC Lenders. Mr. Canning adds that suppliers are demanding cash terms and customers are threatening to cease doing business with the Debtors unless they are provided with letters of credit or similar accommodations. Hence, the Debtors need infusion of additional cash. US$750 Million RBC Credit Facility The RBC Lenders committed to provide a US$750,000,000 revolving credit facility, which was secured up to a maximum of US$135,000,000 by: (a) unlimited guaranties from certain Debtors; (b) a pledge of the shares of Debtor QW Memphis Corp. by the Debtors Quebecor World (USA) Inc., the Webb Company, and Quebecor World Memphis, LLC; (c) a pledge of the shares of QWUSA by Debtor Quebecor Printing Holding Company; (d) security on all personal and real property of QW Memphis, excluding accounts receivable subject to the Existing Receivables Facility and certain real estate located in Covington, Tennessee; and (d) security on all inventory of QWI located in Canada. As of Jan. 18, 2008, the aggregate amount of indebtedness outstanding under the RBC Credit Agreement was approximately US$735,000,000. CADUS$136 Million Soc Gen Credit Agreement A Soc Gen Credit Agreement, on the other hand, provides for an equipment financing credit facility in the aggregate amount of the CADUS$136,165,415, expiring on July 1, 2015. The amounts due under the Soc Gen Credit Agreement are guaranteed and secured on a pari passu basis up to US$35,000,000 by the same collateral as the credit facilities under the RBC Credit Agreement. As of Jan. 11, 2008, the aggregate amount outstanding under the Soc Gen Credit Agreement was approximately US$155,000,000. To protect the interest of the Prepetition Secured Lenders in the QW Memphis Collateral, for any diminution in value from the use of the QW Memphis Collateral, and for the imposition of the automatic stay, the Debtors will release any liens of the Prepetition Secured Lenders in QW Memphis' accounts immediately on the entry of an interim cash collateral order. Establishment of Cash Collateral Account The Debtors will establish a cash collateral account with a certain bank. Certain security interests and liens will be granted: (a) to the Prepetition Secured Lenders, a valid, binding, continuing, enforceable, fully perfected first priority senior security interest in and lien on the Memphis Cash Collateral Account, securing any Prepetition Secured Indebtedness that is secured by valid, perfected non avoidable and enforceable liens in existence as of the bankruptcy filing; provided that the security interest granted will be included in the cap on the Prepetition Secured Indebtedness provided for in the Prepetition Security Agreements; and (b) to Credit Suisse Securities (USA), LLC, as the DIP Facility's Administrative Agent, a valid, binding, continuing, enforceable, fully perfected security interest in and lien on the Memphis Cash Collateral Account immediately junior to the Prepetition Secured Lenders' Lien. The Debtors will deposit in the Memphis Cash Collateral Account an amount equal to the bankruptcy filing value of the QW Memphis Inventory divided by 46 each day until the date on which the balance on deposit in the Memphis Cash Collateral Account is equal to the QW Memphis bankruptcy filing inventory amount. As of Jan. 22, 2008, the Debtors have not disclosed the approximate bankruptcy filing value of the Memphis Inventory. On the Memphis Inventory Release Date, the Debtors will release any Liens of the prepetition secured lenders in the QW Memphis Bankruptcy Filing Inventory. About Quebecor World Based 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. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. In Canada it has 17 facilities in five provinces, through which it offers a mix of printed products and related value-added services to the Canadian market and internationally. 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 its debtor-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 Debtors listed total assets of US$5,554,900,000 and total debts of US$4,140,700,000 when they filed for bankruptcy. 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. (Quebecor World Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000) |
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