Monday, January 21, 2008
BoSacks Speaks Out: Friends, as upsetting as this news may at first appear, it is not a reason to panic. The presses are running, the paper is rolling and ink is being placed within tolerances of 1/1000th of an inch, as per usual with a rhythm and a predictable schedule.
They have received 1 Billion dollars to create and sustain moderate stability. And all they need for now is the stability to forecast the next few quarters of business cycles. After that I don't know what will happen and neither do you, but I suggest that for today and tomorrow it is business as usual. If your titles were to ship this week, I would expect them to do so. If your titles were scheduled to ship next week, the same holds true. It is a time of transition and change, but not of wholesale upheaval. It's my experience that, under conditions like this, all titles will get out and all publishers will continue to publish. The details of this and the plains of action, lay with the accountants of the world.
As I heard Coach Bill Belichick say last night, "Be smart, stay allert and do your job, and we will get through this just fine . . . "
Now you begin to see, don't you, that distance ain't the thing to judge by, at all; it's the time it takes to go the distance in that counts....It's a matter of proportion, that's what it is; and when you come to gauge a thing's speed by its size, where's your bird and your man and your railroad alongside of a flea?....A flea is just a comet, b'iled down small.
- Tom Sawyer Abroad
January 21, 2008
Dear Quebecor World Customer,
Quebecor World has applied today for court protection in Canada and the United States to conduct restructuring for the long-term interests of the company, its customers, suppliers and employees. As part of this process, Quebecor World has secured
US $1 billion of new financing to continue to provide you and all our customers with reliable, quality services on a business-as-usual basis. Our operations in Europe and Latin American are not included in these filings.
The approval of $1 billion in new financing through Credit Suisse and Morgan Stanley was included in the court applications under Canada's Companies' Creditors Arrangement Act and Chapter 11 of the U.S. Bankruptcy Code. In addition, Quebecor World is seeking the appointment of Ernst & Young Inc. to monitor the company activities in the Canadian proceedings.
Despite the difficult economic conditions in general and in the credit market in particular, Quebecor World continues to have a positive cash flow, expert teams of experienced employees, valuable, performing assets and an impressive roster of customers such as you. In the months ahead we will be reviewing the company's performance and developing ways to make further improvements in all our operations.
The prudent action we have undertaken today and the vote of confidence represented by the $1 billion of new financing means that we will continue to operate on a normal basis as we restructure for the future.
We look forward to maintaining our business relationship with you.
Quebecor World's commitment is to keep customers, suppliers and employees and other stakeholders informed of all significant developments, either directly or through our webpages on the Internet. Please do not hesitate to contact us if you require further information. We will make every effort to respond in a timely fashion.
Thank you in advance for your patience and support as we work to achieve an outcome that serves the best interests of our customers, employees, suppliers and other stakeholders.
Quebecor World seeks bankruptcy protection
Updated Mon. Jan. 21 2008 9:56 AM ET
The Canadian Press
MONTREAL -- Commercial printer Quebecor World Inc. is seeking court protection from bankruptcy in Canada and the United States.
The 28,000-employee Montreal-based company said Monday it is filing under the Companies' Creditors Arrangement Act in Canada and Chapter 11 of the U.S. bankruptcy code.
The company also said it has arranged commitments from Credit Suisse and Morgan Stanley for US$1 billion, subject to court approval, to cover current operating expenses including wages and benefits.
"These steps allow the company to continue operating as a going concern for the benefit of all those affected including our many loyal employees, customers and suppliers,'' stated Quebecor World CEO Jacques Mallette.
"The company has a strong business and valuable assets located throughout the world.''
Mallette blamed its troubles on "industry pressures, particularly in Europe, combined with the inability of the company to raise new capital in the current market environment and the inability to complete the sale of its European operations.''
The court filings follows the failure of a proposed C$400-million rescue financing agreement with Quebecor Inc. and Tricap Partners Ltd., which lapsed Sunday after failing to win consent from Quebecor World's bankers. The banks balked at having their debt placed behind the new financing in the event of a future bankruptcy.
Companies under court bankruptcy protection from creditors typically restructure their operations and financings, with the equity value for existing shareholders generally wiped out.
Quebecor World shares slumped by 20.5 cents to 13 cents in early TSX trading after the announcement, down from a 52-week high of $17.25.
Quebecor Inc. issued a statement stressing that it and its other subsidiaries "are not affected in any way'' by Quebecor World's decision.
It added that it told Quebecor World on Sunday that it must remove "Quebecor'' from its corporate name, "to eliminate any confusion in the public.''
Pierre Karl Peladeau, CEO of Quebecor Inc., stated that "Quebecor and Quebecor Media are both in excellent financial health and the outlooks for the future of the businesses are excellent.''
Quebecor Inc. shares were down $1.50 to $30.70 on a severely negative morning overall on the TSX.
Quebecor World to File for Creditor Protection
- US$1 Billion Financing Secured to Meet all Current Operating Needs
Quebecor World Inc. (TSX: IQW)(NYSE: IQW) today announced that the Board of Directors of the Company has authorized it to file for creditor protection under the Companies' Creditors Arrangement Act (CCAA) in Canada. A number of Quebecor World's U.S. subsidiaries are also covered by the CCAA filing in Canada as well as in the United States under Chapter 11 of the United States Bankruptcy Code. Application under the CCAA will be heard by the Quebec Superior Court on January 21, 2008 and the filing under Chapter 11 of the U.S. Bankruptcy Code will be made in the Southern Judicial District of New York.
Quebecor World's Board of Directors, in a unanimous decision, authorized the Company to take this action as the best alternative for the long-term interests of the Company, its employees, customers, creditors and other stakeholders. Operations outside of North America are not included in these filings.
The Company has also announced that it has entered into financing commitments with Credit Suisse and Morgan Stanley for new financing in the amount of US$1 billion. This financing, which is subject to approval of Courts in both Canada and the United States, will allow the Company to meet all current operating needs, including wages, benefits and other operating expenses.
Jacques Mallette, Quebecor World's President and CEO said: "These steps allow the Company to continue operating as a going concern for the benefit of all those affected including our many loyal employees, customers and suppliers. The Company has a strong business and valuable assets located throughout the world. We believe that the steps we are taking today and the strong vote of confidence given to us by our new finance lenders will ensure that we will be able to protect the value of the business for our stakeholders."
Mr. Mallette added: "Today's filing is the result of industry pressures, particularly in Europe, combined with the inability of the Company to raise new capital in the current market environment and the inability to complete the sale of its European operations. The steps we initiate today will allow the Company to make changes which are necessary to ensure the long-term viability of the Company within a process that ensures fair and equitable treatment for all stakeholders."
The deadline of 9:00 a.m. January 20, 2008, for satisfaction of the conditions precedent to the previously announced CDN$400 million rescue financing agreement with Quebecor Inc. and Tricap Partners Ltd. having passed without such conditions being satisfied results in the agreement relating to the rescue financing being terminated and without effect. The Company recognizes and appreciates the time and effort of Quebecor Inc. and Tricap Partners in connection with the rescue financing.
Forward looking statements
This press release may include "forward-looking statements" that involve risks and uncertainties. All statements other than statements of historical facts included in this press release, including statements regarding the prospects of the industry and prospects, plans, financial position and business strategy of Quebecor World Inc. (the "Company"), may constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian securities legislation and regulations. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "plan," "foresee," "believe" or "continue" or the negatives of these terms or variations of them or similar terminology. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Forward-looking statements do not take into account the effect that transactions or non-recurring or other special items announced or occurring after the statements are made have on the Company's business. For example, they do not include the effect of dispositions, acquisitions, other business transactions, asset writedowns or other charges announced or occurring after forward-looking statements are made.
Investors and others are cautioned that undue reliance should not be placed on any forward-looking statements. For more information on the risks, uncertainties and assumptions that could cause the Company's actual results to differ from current expectations, please refer to the Company's public filings available at www.sedar.com, www.sec.gov and www.quebecorworld.com. In particular, further details and descriptions of these and other factors are disclosed in the "Risks and Uncertainties related to the Company's business" section of the Company's Management's Discussion and Analysis for the year ended December 31, 2006, and the "Risk Factors" section of the Company's Annual Information Form for the year ended December 31, 2006.
The forward-looking statements in this press release reflect the Company's expectations as of January 21, 2008 and are subject to change after this date. The Company expressly disclaims any obligation or intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by the applicable securities laws.