Time May Not Be on Donnelley's Side

As rumors swirled the past couple of days that Quebecor World's creditors committee had rejected R. R. Donnelley's acquisitive advances, it became clear that Donnelley's plan may have a fatal flaw.

Folio:'s web site published a piece late Friday (June 5) pointing out several problems with Donnelley's proposal, mainly that working out formal terms, getting approval from antitrust authorities, and consummating the deal would take many months. Meanwhile, QW's special debtor-in-possession financing would run out on July 21, and the creditors would be waiting for their money.

Sources inside and outside QW have passed along the rumor that QW's creditors committee, which is in the driver's seat, had turned down RRD. But the committee's only publicly stated position is a May 15 letter to creditors recommending a vote for the QW reorganization plan that states, "If it appears that this [Donnelley's] proposal will provide recoveries to the Debtors' unsecured creditors that are greater and/or better than those provided under the proposed Plan, the Creditors' Committee will take all necessary steps to pursue such proposal and the Creditors' Committee's recommendation may change."

The letter does not state whether the committee took what RRD recommended in its May 12 proposal as the next step -- "immediately identify a working group at the Quebecor Debtors that can work with us . . . to conduct the due diligence process and finalize the terms of the definitive asset purchase agreement." RRD's letter indicated that it could not present a formal proposal until such a process occurred.

What is not clear is whether Donnelley would still be interested in an acquisition after QW emerges from bankruptcy protection. Stay tuned.