Substantially all Jostens, Von Hoffman and Arcade debt to be refinanced in KKR deal

By Sara Rosenberg

New York, July 28 - All of the bank and bond debt at Jostens Inc., Von Hoffman Corp. and Arcade Marketing will be refinanced in connection with the Kohlberg Kravis Roberts & Co. recapitalization/acquisition deal, excluding the Jostens Holdings 10¼% senior discount notes due 2013, company officials said in a conference call Wednesday.

The company plans to initiate tender offers and consent solicitations for Jostens Inc.'s 12¾% senior subordinated notes due 2010, Von Hoffman Corp.'s 10¼% senior notes due 2009, principal amount of approximately $275 million, Von Hoffman Corp.'s $100 million 10 3/8% senior subordinated notes due 2007, Von Hoffman Holding's 13½% subordinated exchange debentures due 2009, principal amount approximately $47 million, and AKI Inc.'s 10½% senior notes due 2008, principal amount approximately $103 million.

Pricing for the tender offers have not yet been determined.

"In addition, there are closely held preferred securities at both Jostens and Arcade that will also be refinanced as part of this transaction," company officials said in the call.

As was previously reported, KKR has agreed to acquire Von Hoffmann and Arcade from DLJ Merchant Banking Partners and, as part of the transaction, Von Hoffmann and Arcade will contribute to Jostens Holdings in exchange for stock of Jostens Holdings, which will then be recapitalized. Upon completion of these transactions, KKR and DLJ Merchant Banking will each own a 45% stake of Jostens Holdings, which will be renamed. The remaining 10% stake will be held by the management team as well as a small group of existing minority investors in Jostens. The new company will be well capitalized and consist of three operating companies, each with its own brand identity, market strategy, and customer relationships.

The transaction, which is valued at roughly $2.2 billion, is expected to be financed in part by a new credit facility and a new bond offering, with both debt transactions probably post-Labor Day business, a market source previously told Prospect News.

"We would expect to launch the financing in early September and look to close the transaction mid-to-late September," officials added in the call, without getting into specifics about the financing package.

Credit Suisse First Boston is expected to be involved in the debt transactions in some way.

Jostens is a Minneapolis provider of yearbooks, class rings and graduation products. Von Hoffman is a St. Louis printer of educational textbooks and supplemental materials and direct marketing print services. Arcade is a New York printer and manufacturer of sampling products for the fragrance, cosmetics, consumer products, and food and beverage industries.

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