LSC Communications gets court approval of sale to Atlas affiliate

By Sarah Lizee

Olympia, Wash., Sept. 30 – LSC Communications, Inc. announced that the U.S. Bankruptcy Court for the Southern District of New York has approved its previously announced stock and asset purchase agreement, under which an affiliate of Atlas Holdings LLC with the support of certain of LSC’s secured creditors will acquire substantially all of the company’s assets.

The transaction remains subject to customary closing conditions, including regulatory approvals. It is expected to close during the fourth quarter of 2020.

As previously reported, the Atlas affiliate will acquire substantially all of LSC’s assets through a combination of cash and a credit bid of obligations under the company’s secured term loan facility and senior secured notes at the direction of the creditor group.

The purchaser will also assume some of LCS’s liabilities of, including, subject to prerequisite conditions being satisfied, obligations related to its qualified pension plan.

According to the asset purchase agreement filed with the Securities and Exchange Commission, the final cash consideration will be equal to the amount outstanding under the senior secured revolving credit facility, plus the amount outstanding under the company’s debtor-in-possession financing, plus an amount equal to an administrative expense amount, plus any unsecured creditors committee settlement amount, less closing cash.

“We entered into this financial restructuring process in April due to the fundamental changes in our industry and to strengthen LSC’s financial position for the future,” LSC chairman, president and chief executive officer Thomas J. Quinlan III said in a Sept. 15 news release.

“Through this transaction, we will be able to move ahead with an improved balance sheet and a more sustainable capital structure, enabling LSC to continue investing in our business and building on our strong foundation as a leader in print, mailing and distribution and office products.”

Atlas co-founder and managing partner Timothy Fazio said “Over the last two decades, our team at Atlas has developed an intimate knowledge of the printing and paper industries and established a reputation for successfully operating industrial businesses in markets experiencing structural challenges.

“As such, we believe Atlas is the ideal new partner for LSC and the customers they serve.”

In line with the purchase agreement, the Atlas affiliate will receive deal protections as previously authorized by the U.S. Bankruptcy Court for the Southern District of New York. According to the 8-K, this includes a 3% break-up fee and reimbursement of up to $750,000 of the Atlas affiliate’s sale-related expenses, both of which would be paid if the proposed purchaser is not ultimately the winning bidder.

Sullivan & Cromwell LLP is serving as legal adviser to LSC, Evercore Group LLC is serving as financial adviser, and AlixPartners, LLP is serving as restructuring adviser.

LSC is a Chicago-based provider of digital print, print-related services and office products. The company filed bankruptcy on April 13 under Chapter 11 case number 20-10950.

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