Quad/Graphics plans $1.2 billion facility for World Color purchase

By Sara Rosenberg

New York, Jan. 26 - Quad/Graphics Inc. has received a commitment for a new $1.2 billion credit facility to help fund its acquisition of World Color Press Inc., company officials said in a conference call on Tuesday.

JPMorgan has committed $1.05 billion of the deal and U.S. Bank committed $150 million.

The credit facility consists of a $400 million cash-flow revolver and an $800 million term loan B.

"As soon as we complete the ratings process, we would expect to start the syndication and marketing process on both the revolver and the term loan B," officials remarked in the call.

The target is to complete final financing by the end of March, officials added.

Under the transaction agreement, each World Color common share will be converted after a multi-step transaction into a number of class A common shares of Quad/Graphics at a share exchange ratio to be determined at closing.

Simultaneously with the closing, $140 million will be distributed in cash to Quad/Graphics' existing common shareholders.

Quad/Graphics will also provide at least $93.3 million to World Color to purchase any warrants not converted to common shares and to fund redemptions of or payments due on any other equity securities not converted to common shares. If less than $93.3 million is needed to make such purchases and redemptions, the remainder will be distributed to World Color common shareholders in cash.

Proceeds from the credit facility will be used to fund cash distributions, refinance Quad/Graphics' existing revolving credit facility, refinance World Color's existing debt, and fund repayment of certain other World Color obligations.

Closing is expected in the summer, subject to shareholder and regulatory approvals. There is no financing condition.

Quad/Graphics and World Color had aggregate unaudited revenues for the 12-month period ended Sept. 30 of $5.1 billion and aggregate unaudited adjusted EBITDA of $647 million.

Quad/Graphics is a Sussex, Wis.-based printer of catalogs, magazines and other commercial products. World Color is a Montreal-based provider of print, digital and related services to retailers, catalogers, publishers, branded-goods companies and other businesses.

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