MONTREAL -- Insolvent printing giant Quebecor World Inc.IQW-T is a step closer to exiting from bankruptcy protection after its Canadian creditors strongly endorsed its restructuring plan yesterday.
The yes vote, concluded at a downtown Montreal hotel, was a positive indicator of the outcome of a similar vote by U.S. creditors. The tally of that vote was not expected until late yesterday, said Quebecor World spokesman Tony Ross.
If the restructuring proposal wins the required approvals on both sides of the border, the next step is to get approbation from a bankruptcy court judge at a hearing scheduled for June 30.
The two classes of creditors in Canada - the banks and the unsecured creditors - voted by 76 per cent and 96.5 per cent in favour, respectively. They represented 72 per cent and 99 per cent of the dollar values of the claims, respectively.
There are about 2,000 creditors in Canada and some 6,000 in the U.S. About 60 creditors or creditors' lawyers showed up in person for yesterday's voting session in Montreal, which lasted about 45 minutes.
Keith Findlay, the chief financial officer of Brymag Transport Inc. of Dorval, Que., a major Quebecor World supplier, said he voted for the plan because he believes the company has a good shot at making it as a renewed enterprise in a post-bankruptcy scenario.
"A company gets in trouble and they do their best to try to restructure and bring back some value. We can just hope. We believe in their vision," he said before the vote.
He said his company will get a portion of what it is owed, but declined to provide details.
"We'll get something back. It doesn't cover everything but we've got to look further down the road," he said.
Some observers have argued that Quebecor World would have been better off accepting a recent takeover offer from Chicago rival R.R. Donnelley & Sons Inc., based on the logic that tough market conditions demand joining forces with the strongest industry players.
The North American printing business is in turmoil as it tries to cope with a host of challenges, including declining demand, soft pricing and the threat from Web-based publishing.
Quebecor World's board decided to reject Donnelley's $1.55-billion (U.S.) stock-and-cash offer and proceed with the restructuring plan.
Mr. Findlay said he was not enthusiastic about the Donnelley offer because it would result in less competition in the printing business and likely reduced opportunities for local suppliers such as Brymag.
If the restructuring plan goes ahead, the company will issue new class A preferred shares, common shares and warrants.
Montreal-based Quebecor World is also slated to soon announce a new board of directors and a new name. Print industry website printcan.com recently reported that the new moniker being considered is Novink.
Coming out of bankruptcy protection, Quebecor World's value would be between $1.25-billion and $1.75-billion, according to a report by an outside evaluator.
In U.S. Bankruptcy Court filings last month, the company said it expects to swing to a modest profit of $7-million next year, compared with a loss of $184-million in 2009.
In the event that Quebecor World fails to win the required creditor approvals, the court-appointed monitor Ernst & Young has warned that the company would likely be facing a liquidation of its assets.
Quebecor World filed in January of 2008 for court protection from its creditors under the Companies' Creditors Arrangement Act in Canada and Chapter 11 proceedings in the U.S.
© The Globe and Mail
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