ACG and American Color Graphics Complete Cross-Border Merger and Restructuring

The successful cross-border restructuring of ACG Holdings Inc. and American Color Graphics Inc. under Chapter 11 of the US Bankruptcy Code and section 18.6 of the Companies' Creditors Arrangement Act (Canada) (CCAA), along with three of their affiliates who proceeded under Chapter 11 only (collectively, ACG), was achieved by way of an expedited, pre-packaged plan of reorganization that was recognized as a “foreign proceeding” under the CCAA. The CCAA proceedings were terminated on November 4, 2008, and the final US Chapter 11 proceedings were closed on March 31, 2009, thereby concluding the restructuring. ACG Canada was granted creditor protection in Canada pursuant to section 18.6 of the CCAA by the Ontario Superior Court of Justice on July 16, 2008, which recognized the Chapter 11 proceedings begun July 15, 2008, presided over by the US Bankruptcy Court for the District of Delaware.

Through the CCAA and Chapter 11 proceedings, ACG effected a previously announced merger with Vertis Holdings Inc., Vertis Inc. and certain subsidiaries of Vertis Inc. (collectively, Vertis), which filed concurrent but separate Chapter 11 proceedings, thereby combining two of the largest printing and premedia companies in North America. Upon consummation of both Chapter 11 proceedings, ACG was merged with and became a wholly owned subsidiary of Vertis.

The consensual, pre-packaged restructurings reduced the merged company's debt obligations by approximately US$1 billion (before transaction fees and expenses). As part of the transaction, noteholders of Vertis and ACG exchanged their bonds for an aggregate of US$550 million in new notes and substantially all of the new equity in the merged company.

In connection with the pre-packaged plans, ACG obtained a commitment from Bank of America, N.A., as administrative agent and L.C. issuer, to provide debtor-in-possession (DIP) financing consisting of a US$135 million revolving loan facility, with a US$20 million sub-limit for standby letters of credit. Additionally, Vertis obtained US$380 million in DIP financing from GE Commercial Finance. Exit financing totalling $650 million, including a $250 million senior secured revolving credit exit facility from GE Commercial Finance and a $400 million exit facility from Morgan Stanley Senior Funding Inc., as lead arranger, became effective on consummation of the pre-packaged plans.

ACG was represented in Canada by a team from Goodmans LLP that included Jay Carfagnini, David Bish and Lauren Cappell (restructuring), Jason Wadden (litigation) and David Wiseman (banking and finance). Ray Schrock, Paul Basta, Chad Husnick, Jonathan Zinman and Ed Rasp (restructuring) of Kirkland & Ellis LLP acted as US counsel to ACG. Gary Holtzer and Stephen Youngman (restructuring) of Weil Gotshal & Manges LLP were US counsel to Vertis.

PricewaterhouseCoopers Inc's. John McKenna acted as the court-appointed information officer in the CCAA proceedings, with Craig Hill and Sam Rappos (restructuring) of Borden Ladner Gervais LLP acting as Canadian counsel to the information officer.

Other key Canadian participants in ACG's restructuring included: (i) General Electric Capital Corporation, represented in Canada by Virginie Gauthier (restructuring) and David Amato (banking) of Ogilvy Renault LLP; and (ii) Bank of America, with whom ACG maintains its general operating accounts, represented in Canada by David Byers and Elizabeth Pillon (litigation) of Stikeman Elliott LLP.