Quad/Graphics launches $1.2 billion facility at Libor plus 350 bps

By Sara Rosenberg

New York, March 10 - Quad/Graphics Inc. launched its $1.2 billion credit facility (Ba2/BB+) on Wednesday with price talk of Libor plus 350 basis points with a 1.5% Libor floor, according to a market source.

Tranching on the deal is comprised of a $400 million four-year cash-flow revolver and an $800 million six-year term loan B.

The term loan B is being offered at an original issue discount of 99, the source added.

JPMorgan and U.S. Bank are the lead banks on the facility, with JPMorgan committing $1.05 billion of the deal and U.S. Bank committing $150 million.

Proceeds from Quad/Graphics' credit facility will be used to help fund cash distributions in connection with the acquisition of World Color Press Inc., refinance its existing revolver, refinance World Color's existing debt, and fund the repayment of certain other World Color obligations.

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.

Closing on the acquisition 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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