Monday, June 8, 2009

Donnelley Makes Another Pass at Quebecor World

Please see the June 9 update, "After 3 Swings at Quebecor, Has Donnelley Struck Out?

Printing giant R.R. Donnelley sweetened the pot today in making another offer for rival Quebecor World.

Donnelley will kick in another $100 million in cash and help pay for QW’s financing costs until the deal is closed, it said in a letter to QW that it also filed with the U.S. Securities and Exchange Commission.

The letter revealed that the two companies have been in discussions since RRD made its first offer for QW on May 12. It said that RRD had already agreed last week to assume some of QW’s pension liabilities and to structure the deal to avoid tax liabilities for QW.

“If you are interested in continuing to pursue this transaction, we ask that you let me know by the close of business on Wednesday, June 10th,” today’s letter states. RRD is apparently eager to head off or alter a scheduled vote next week by QW’s creditors on a plan to have QW emerge from bankruptcy protection as an independent company.

QW has expressed concern that if that vote failed or were delayed, the company could have trouble continuing to operate after its debtor-in-possession financing runs out on July 21. RRD offered today to cover 50% of the costs of extending that financing – or 100% if it is not able to complete the acquisition.

“There would be no financing condition to the Acquisition,” today’s letter says. “We have sufficient funds to pay the cash portion of the consideration from cash on hand and/or availability under our existing revolving credit facility.”

RRD is still proposing that it be QW’s “stalking horse”, which means QW creditors could seek a better offer.

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