American Color Graphics seeks consent to defer interest on 10% notes

By Angela McDaniels

Tacoma, Wash., Nov. 6 - American Color Graphics, Inc. is soliciting consents from holders of its 10% senior second-secured notes due 2010 to defer the interest payment due on Dec. 15 to March 15, according to a company news release.

The company said holders of 78.4% of the notes have agreed to consent to the deferral.

The consent solicitation ends at 11 a.m. ET on Nov. 14.

The deferral is conditioned on the receipt of consents from holders of 90% of the notes and on the receipt of a waiver from the company's bank lenders.

America Color Graphics is in negotiations with its senior credit facility lenders for an additional $5 million term loan and a waiver of any default through Feb. 15 resulting from noncompliance with the first-lien coverage ratio covenant.

The bank loan amendment and waiver are in turn conditioned on satisfaction of the closing conditions under the consent solicitation.

The Brentwood, Tenn., premedia and print company said it believes the administrative agent and the lenders under its facilities will execute the amendment and waiver in connection with the closing of the consent solicitation.

"These important steps will improve ACG's liquidity and give us additional time to pursue our strategic options with our significant stakeholders and with potential acquirers of ACG," chief executive officer Stephen M. Dyott said in a company news release.

On Oct. 4, the company announced that it will review its strategic options and said those options could include holding an exchange offer for the 10% notes, seeking waivers or amendments from the noteholders and bank lenders to incur additional debt, refinancing the company's bank credit facilities and selling the entire company or disposing of material assets.

The announcement followed Vertis, Inc.'s termination of the proposed merger between the two companies on Oct. 1.

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