After failing to secure financing, Quebecor World has asked for court protection from creditors:
Quebecor World Inc. filed Monday for creditor protection, telling a court hearing it will run out of cash within days, after failed attempts over the weekend to strike a compromise deal with its bankers.
The struggling commercial printing giant's application for protection under the Companies' Creditors Arrangement Act was being heard in Quebec Superior Court.
"We are days from a total liquidity collapse," Derrick Tay, a lawyer for Quebecor World told the court. If the company doesn't get the emergency debt financing it is seeking, it will run out of cash by Thursday, he said.
"This company will die. There is no money left."
Quebecor World announced that has entered into financing commitments with Credit Suisse and Morgan Stanley for new financing in the amount of US$1 billion to meet it current operating expenses.
Via BoSacks, is a letter from Jacques Mallette, President and CEO of Quebecor World:
January 21, 2008
Dear Quebecor World Customer,
Quebecor World has applied today for court protection in Canada and the United States to conduct restructuring for the long-term interests of the company, its customers, suppliers and employees. As part of this process, Quebecor World has secured
US $1 billion of new financing to continue to provide you and all our customers with reliable, quality services on a business-as-usual basis. Our operations in Europe and Latin American are not included in these filings.
The approval of $1 billion in new financing through Credit Suisse and Morgan Stanley was included in the court applications under Canada's Companies' Creditors Arrangement Act and Chapter 11 of the U.S. Bankruptcy Code. In addition, Quebecor World is seeking the appointment of Ernst & Young Inc. to monitor the company activities in the Canadian proceedings.
Despite the difficult economic conditions in general and in the credit market in particular, Quebecor World continues to have a positive cash flow, expert teams of experienced employees, valuable, performing assets and an impressive roster of customers such as you. In the months ahead we will be reviewing the company's performance and developing ways to make further improvements in all our operations.
The prudent action we have undertaken today and the vote of confidence represented by the $1 billion of new financing means that we will continue to operate on a normal basis as we restructure for the future.
We look forward to maintaining our business relationship with you.
Quebecor World's commitment is to keep customers, suppliers and employees and other stakeholders informed of all significant developments, either directly or through our webpages on the Internet. Please do not hesitate to contact us if you require further information. We will make every effort to respond in a timely fashion. Thank you in advance for your patience and support as we work to achieve an outcome that serves the best interests of our customers, employees, suppliers and other stakeholders.
Sincerely,
Jacques Mallette
Discussion
By P. Hamilton on Jan 21, 2008
I joined Quebecor at the start of their rise - I was working for Ronalds Printing when it was bought to make Quebecor the largest printer in Canada. I participated in the amazing growth that followed, starting with the acquisition of Maxwell Graphics in the US and the push into Europe and South America. Those were heady days but the company, under Pierre Péladeau had a focus and a goal - to be the biggest and best printer in the world. It was hard work but rewarding as Mr Péladeau knew what he was about as did those around him and the focus was always on efficiency, flexibility, entrepreneurial attitude and growth. After the old mans death in 1997 it was hoped that the blueprint would be followed. Unfortunately, this was not to be the case. Those in the company that understood printing and it's unique needs were slowly replaced by those that understood politics and stock prices. Investment in infrastructure and growth were gradually choked off with print revenues used to fund the needs of ego and grand ideas of creating a multi-media company regardless of the risks or costs. The people who had built Quebecor Printing into the giant it became were squeezed out by those who said "yes sir" to changes they knew were unsound. Those who knew how to sell assets and hide bad results moved ahead, and those who knew how to actually run and grow a print business slowly left for other companies and opportunities. Note that the company has had 6 CEO's in the last 10 years. It is a sad day to see what Quebecor has become - but for those of us who worked on the inside during the good times, the result is not unexpected. A warning is there for anyone in business ... keep your nose to the grindstone, focus on competence, your employees, customers and the state of your equipment and technology and you'll do well. If, however, you take your eyes off the ball and start believing in your own PR, the consequences can be dire. Oh yes ... and beware of debt financing.
By tommytrc on Jan 23, 2008
Okay lets look at this...can the printing industry absorb 6 billion dollars in print if they go under? I know the industry is in an over capacity situation presently, boy would that change if QW doesn't get their act together.
By William J Sherman on Jan 23, 2008
I was with Quebecor from 1997 unitl 2005. I saw the careers of many good people destroyed and many incompetent people advanced. PK never took responsibility for anything as long as he could be on tv with his girlfriend.
There was never a strategic plan in place for how to attack the highly competitive marketplace, only plant closings and staff reductions.
I regret that so many fine people may be hurt and PK is still a millionaire
By Henk Gianotten on Jan 23, 2008
I learned that from now on it's Q-World and the name Quebecor World will no longer be used. For Europe the name remains unchanged QWE.
By Tom M. on Jan 25, 2008
I also was with Quebecor from 1990 to 2003. The last few postings are completely accurate. Forget about knowledge and experience, just smile and say YES PK. What a shame, they had some real talent. I worked with the best people assembled, who got results. But they were all pushed out, and replaced with Clowns. Unfortunately as long as the clowns are running the circus, No amount of bail out money will help. As mentioned in the other postings, we all saw it comming.
I feel bad for the rest of the good people still left there. Beware rescuers, the Clowns are still in charge.
By paul lefebvre on Jan 27, 2008
it is amazing to me how quebecor can price 15-20% below the rest of the competition. i guess it is easy as long as you are willing to let the company bleed to death. my hope is that in the tough year upcoming they do not continue to give everything away and totally ruin the business for the people who know how to price it !!!
By P. Hamilton on Jan 28, 2008
re: it is amazing to me how quebecor can price 15-20% below the rest of the competition. i guess it is easy as long as you are willing to let the company bleed to death. Indeed. They priced that way to inflate sales figures ... it was all part of the smoke and mirrors way of running the company, and don't be fooled, many other public companies do the same thing. The losses are "hidden" by a variety of accounting maneuvers that are perfectly legal. I remember being instructed in the use of "sand-bags" in late 1999 particularly the use of capital assets and special write-offs to make the sales numbers match projections even though the profits were not there. The "profit" came from selling or writing off machines, divisions, and people. Budgets were a joke - divisions would present a real budget and then were told to "rework" it to match the pre-determined budget from head office. Managers that did, stayed. Those that didn't or couldn't (and in the rare case WOULDN'T), "retired". Actually, a person could probably get an ok printing plant for a good price right about now. I'm sure Q-World will sell-off the best remaining assets in the name of "restructuring", because that's about all they know how to sell - they certainly don't know how to sell printing.
Discussion
Join the discussion Sign In or Become a Member, doing so is simple and free