Merrill Corp. reaches agreement on recapitalization, new investment

New York, June 3 - Merrill Corp. said it reached an agreement on a recapitalization of the company that will waive or cure debt defaults and lead to an injecting of extra capital into the company.

Under the plan, Merrill will amend its senior credit facility and amend and exchange its outstanding senior subordinated notes and senior preferred shares.

On those steps becoming effective, Merrill's largest shareholder, DLJ Merchant Banking Partners II, LP, will invest $18.5 million in the St. Paul, Minn. communications and document services company.

Merrill said its senior lenders have agreed on a forbearance period until at least Aug. 14, 2002 during which they will not exercise their rights and remedies under the senior credit facility as a result of previously disclosed defaults.

Holders of 77% of Merrill's senior subordinated notes due 2009 and 100% of both the senior discount notes due 2008 and the senior preferred shares have entered into a lock-up agreement supporting the recapitalization.

Merrill will launch an exchange offer and consent solicitation for the senior subordinated notes, the senior discount notes and senior preferred shares within the next 30 days.

The financial advisor for the senior subordinated noteholders is Chanin Capital Partners and the information agent for the exchange offer is D. F. King & Co., Inc.

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