Vertis extends tender deadline for 13½%, 18½% senior notes to Aug. 31

By Susanna Moon

Chicago, July 16 - Vertis Holdings, Inc. said its operating subsidiary Vertis, Inc. again extended the private tender offers, exchange offers and consent solicitations for its 13½% senior pay-in-kind notes and its 18½% senior secured second-lien notes due 2012.

The offers will now expire at 5 p.m. ET on Aug. 31, extended from midnight ET on July 15.

Again, Vertis said the extension provides more time to complete other elements of its refinancing.

As previously noted, holders will receive the same payment regardless of when they tender their notes. Before, holders who tendered by April 28 were to receive a higher cash payment or number of shares.

As of midnight ET on July 15, investors had tendered $204.9 million principal amount, or 85%, of 13½% notes. Of that amount, about $177 million principal amount, or 73%, was tendered for stock and about $27.9 million principal amount, or 12%, was tendered for cash.

Holders also had tendered $362.4 million principal amount, or 95%, of the 18½% notes.

The figures are unchanged as of midnight ET on June 25.

The offers began on April 16 and have been extended multiple times. The company canceled its 13½% notes exchange offer in February after failing to meet the minimum tender condition.

The company needed valid tenders from holders of at least 95% of each notes series.

13½% notes offers

Vertis is offering to exchange 784.377 shares for each $1,000 principal amount of 13½% notes.

The exchange is only open to qualified institutional buyers or accredited investors.

The company is also tendering for the notes that are not eligible for the exchange offer.

It will pay $400 for each $1,000 principal amount of notes, including a $50 early tender payment.

The company is also soliciting consents to amend the indenture to remove substantially all of the restrictive covenants and some events of default, and it will pay $5.00 per $1,000 principal amount for those who delivered consent by 5 p.m. ET on April 28.

Vertis is seeking consents from holders of a majority of notes. It added that it will fund the offer from a private placement of shares to Avenue Capital Group.

18½% exchange offer

Vertis' private exchange offer involves the issue of new 13% senior secured notes due 2016.

It is offering to exchange $393.73 principal amount of the new notes and $591.27 of cash for each $1,000 principal amount of 18½% notes.

Before the offer was amended, holders who tendered after the early deadline would have received $393.73 principal amount of new notes and $561.27 of cash for each $1,000 principal amount of 18½% notes.

Those who tender their notes for exchange will receive additional new notes in an amount equal to 98.5% of the accrued interest to the settlement date.

The company is also soliciting consents to amend the indenture to eliminate substantially all of the restrictive covenants and some events of default and related provisions. It needs consents from holders of at least 75% of the notes.

The offer is also subject to holders not affiliated with Avenue Capital tendering at least 15% of each series of notes.

Overall refinancing effort

The company said that the offers are part of a comprehensive $1.1 billion refinancing of substantially all of Vertis' outstanding secured and unsecured indebtedness.

The refinancing also includes Vertis' existing $225 million revolving credit facility as well as the issue of roughly $600 million of new first-lien debt, the proceeds of which will be used to fund the 18½% notes offer.

Vertis will issue to Avenue Capital about $113 million of new 13%/15% PIK option senior secured notes due 2016 in a private exchange for amounts owed to Avenue Capital under Vertis' existing term loan. It will also exchange about $74 million of existing 18½% notes held by Avenue Capital for shares of Vertis Holdings' 13½% exchangeable pay-in-kind preferred stock.

The overall effect of the refinancing transactions will improve Vertis' capital structure by reducing its debt by more than $250 million while cutting its annual interest expense and extending its debt maturity profile, according to a news release.

Bondholder Communications Group, LLC (212 809-2663) is the information and exchange agent.

Baltimore-based Vertis provides print advertising and marketing services.

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