Quad/Graphics cuts revolver to $500 million, amends covenants, pricing

By Wendy Van Sickle

Columbus, Ohio, July 6 – Quad/Graphics, Inc. amended its senior secured credit facility on June 29, reducing the size of the revolver by $300 million to $500 million, among other changes, according to an 8-K filing with the Securities and Exchange Commission.

The amendment also adjusted the pricing grid to provide for an increased interest margin when the total leverage of the company is above 3.5 to 1.0 and the added a 0.75% Libor floor.

Additionally, the amendment provided some financial covenant relief through the fiscal quarter ending Sept. 30, 2021, during which period operational covenants will also be adjusted, including limiting permitted acquisitions to a net $75 million purchase price, subject to the total net leverage ratio being 0.25 less than the maximum allowed, and prohibiting repurchases of capital stock.

Finally, some direct and indirect subsidiaries of the company organized in Mexico must provide unsecured guaranties under the amendment.

The following amendments were made to the quarterly financial covenants:

• On a rolling 12-month basis, the total net leverage ratio may not exceed (i) 4.25 to 1.00 for the quarters ending June 30 and Sept. 30; 4.5 to 1.0 for the quarters ending Dec. 31 and March 31, 2021; 4.25 to 1.00 for the quarter ending June 30, 2021; and 4.125 to 1.00 for the quarter ending Sept. 30, 2021, provided that that if the covenant relief period ends on or prior to Sept. 30, 2021, the company will be required to comply with the maximum total leverage ratio covenant below, instead of this maximum total net leverage ratio covenant; and

• On a rolling 12-month basis, the total leverage ratio may not exceed 3.75 to 1.00 for the quarter ending Dec. 31, 2021 and each quarter onwards.

JPMorgan Chase Bank, NA, U.S. Bank NA, PNC Capital Markets LLC, Fifth Third Bank, NA, BMO Capital Markets Corp. and BofA Securities, Inc. are the joint lead arrangers and bookrunners. JPMorgan is the administrative agent.

Quad/Graphics is a Sussex, Wis.-based printer and media channel integrator.

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