Vertis reinstates withdrawal rights in tenders for 13½%, 18½% notes

By Angela McDaniels

Tacoma, Wash., July 28 - Vertis Holdings, Inc. said its operating subsidiary Vertis, Inc. will temporarily reinstate withdrawal rights in the private tender offer, exchange offer and consent solicitation for its 13½% senior pay-in-kind notes and the private exchange offer and consent solicitation for its 18½% senior secured second-lien notes due 2012.

Holders may withdraw tendered notes and revoke consents from 9 a.m. ET on July 29 until 5 p.m. ET on Aug. 2, according to a company news release.

In connection with the reinstatement of withdrawal rights, Vertis also decided to release holders who have entered into support agreements to participate in the offers from those agreements so that they may withdraw their notes if desired.

The company reinstated the withdrawal rights in connection with the release of supplemental materials that update the $1.1 billion refinancing of substantially all of its outstanding secured and unsecured debt, including its $225 million revolving credit facility.

The supplemental materials include information relating to Vertis' business condition and results of operations, changes to the terms of some of the refinancing transactions and the potential use of an early settlement in connection with the tender offers.

Subject to the consummation of the refinancing transactions, Vertis may accept any notes that have been tendered on an early acceptance date. The company said it currently expects to exercise this option but would only do so after the withdrawal period has passed.

As of 5 p.m. ET on July 26, investors had tendered $204.9 million principal amount, or 85%, of 13½% notes and delivered the related consents. Of that amount, about $177 million principal amount was tendered for stock and about $27.9 million principal amount was tendered for cash.

Holders also had tendered $362.4 million principal amount, or 95%, of the 18½% notes and delivered consents.

The figures are unchanged from midnight ET on June 25.

The offers began on April 16 and will expire at 5 p.m. ET on Aug. 31. They have been extended multiple times. The company canceled its 13½% notes exchange offer in February after failing to meet the minimum tender condition.

The company needs valid tenders from holders of at least 95% of each notes series.

13½% notes offers

Vertis is offering to exchange 784.377 shares for each $1,000 principal amount of 13½% notes.

The exchange is only open to qualified institutional buyers or accredited investors.

The company is also tendering for the notes that are not eligible for the exchange offer.

It will pay $400 for each $1,000 principal amount of notes, including a $50 early tender payment.

The offers were previously amended so that all holders will receive the same payment regardless of when they tender their notes. Before, holders who tendered by April 28 were to receive a higher cash payment.

The company is also soliciting consents to amend the indenture to remove substantially all of the restrictive covenants and some events of default, and it will pay $5 per $1,000 principal amount for those who delivered consent by 5 p.m. ET on April 28.

Vertis is seeking consents from holders of a majority of notes. It added that it will fund the offer from a private placement of shares to Avenue Capital Group.

18½% exchange offer

Vertis' private exchange offer involves the issue of new 13% senior secured notes due 2016.

It is offering to exchange $393.73 principal amount of the new notes and $591.27 of cash for each $1,000 principal amount of 18½% notes.

Before the offer was amended, holders who tendered after the early deadline would have received $393.73 principal amount of new notes and $561.27 of cash for each $1,000 principal amount of 18½% notes.

Those who tender their notes for exchange will receive additional new notes in an amount equal to 98.5% of the accrued interest to the settlement date.

The company is also soliciting consents to amend the indenture to eliminate substantially all of the restrictive covenants and some events of default and related provisions. It needs consents from holders of at least 75% of the notes.

The offer is also subject to holders not affiliated with Avenue Capital tendering at least 15% of each series of notes.

Bondholder Communications Group, LLC (212 809-2663) is the information and exchange agent.

Baltimore-based Vertis provides print advertising and marketing services.

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