Vertis granted court approval to modify pre-packaged Chapter 11 plan

By Jennifer Lanning Drey

Portland, Ore., Oct. 10 - Vertis Inc. obtained court approval to modify its pre-packaged plan of reorganization and add a new second-lien notes indenture without re-soliciting votes on the plan, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

The plan modification includes an arrangement allowing American Color Graphics creditors Goldman Sachs and TCW to reallocate a portion of the new common stock to which they are entitled under American Color's plan of reorganization to holders of Vertis' second-lien notes.

The new second-lien indenture relates to a change in the interest rate on the new Vertis second-lien notes from cash pay to paid-in-kind at an increased interest rate for a limited period of time on $294 million of the notes and for the entire term on the $56 million balance of the notes, Vertis said in a filing made earlier in the week with the Securities and Exchange Commission.

The changes were made after Vertis' exit financing term loan lenders requested that the company decrease the amount of cash leaving the business after the plan effective date.

Vertis previously said the modifications to the plan of reorganization do not affect creditor treatment and were made to bolster the reorganized company's liquidity while the merger synergies are being implemented.

In conjunction with the amendments, Vertis also modified its financial performance projections for 2008 to 2012 to reflect a more conservative estimate of market growth rates and new business capture.

As previously reported, Vertis and American Color Graphics filed pre-packaged plans of reorganization to implement a merger, under which American Color Graphics will become a wholly owned subsidiary of Vertis.

The bankruptcy court approved the plans on Aug. 26.

Baltimore-based Vertis provides print advertising and marketing solutions.

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