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Vertis And American Color Graphics Announce Additional Support For Merger

Monday, June 02, 2008

Press release from the issuing company

BALTIMORE, Md., and BRENTWOOD, Tenn. (May 30, 2008) – Vertis Communications (“Vertis”) and American Color Graphics (“American Color”) announced additional support for their merger and comprehensive restructuring plans released last week.

Today, the companies announced they have entered into agreements with an aggregate of approximately 72 percent of the outstanding principal amount of the 9.75 percent Senior Secured Second Lien Notes due 2009, 83 percent of the outstanding principal amount of the 10.875 percent Senior Notes due 2009, and 75 percent of the outstanding principal amount of the 13.5 percent Senior Subordinated Notes due 2009 (collectively, the "Vertis Notes") of Vertis, and the holders of an aggregate of approximately 70 percent of the outstanding principal amount of the 10 percent Secured Second Lien Notes due 2010 (the "ACG Notes") of American Color, to exchange their bonds for an aggregate of $550 million in new notes and substantially all of the new equity in the combined company.

The transaction is also supported by Vertis’ principal stockholders and the holders of over 95 percent of the outstanding principal amount of Vertis Holdings Mezzanine Notes. The agreement on the terms of the consensual financial restructurings would reduce the combined company’s debt obligations by approximately $725 million (excluding Vertis Holdings Mezzanine Notes) before transaction fees and expenses. In addition, the more than $240 million in Vertis Holdings Mezzanine Notes will no longer be an obligation of the company after the transaction closes.

“Gaining support from the overwhelming majority of both Vertis and ACG noteholders demonstrates their confidence in the successful outcome of our merger and restructuring plans,” said Mike DuBose, chairman and CEO of Vertis. “These agreements will expedite the process and we anticipate beginning collaborations with our new ACG colleagues in late summer to deliver truly comprehensive and effective marketing solutions that drive results. In addition, these agreements and the support obtained have been received positively by our customers and suppliers and we are starting to see a return to more normalized relationships and terms with our valued vendor partners.”

The companies and the consenting noteholders have entered into restructuring agreements pursuant to which the companies and consenting noteholders have agreed to consummate the restructuring through prepackaged Chapter 11 plans of reorganization for each company in order to more efficiently exchange the notes. In addition to agreeing to support the prepackaged plans, in the restructuring agreements, the noteholders agreed to forbear from exercising remedies relating to the nonpayment of interest on any of the Vertis Notes. As a result, the company has decided it will not make its interest payments on June 1, 2008 or June 15, 2008. This will increase liquidity during the prepackaged reorganization. Importantly, the restructuring agreements and terms of the prepackaged plans call for all trade creditors, suppliers, customers and employees to receive all amounts owed to them in the ordinary course of business.

The companies expect to launch a formal solicitation of votes for their prepackaged Chapter 11 plans of reorganization from holders of both Vertis Notes and ACG Notes within approximately 20 days from May 22, 2008, the date the restructuring agreements were signed. Votes will be due approximately 30 days after the companies launch the solicitation. The agreements with the noteholders require them to vote in favor of the plan and ensure that the companies will achieve the two-thirds in amount threshold required for the bankruptcy court to confirm the plan.

Upon receiving the requisite acceptances, the companies would commence prepackaged Chapter 11 proceedings in order to implement their plans and consummate the merger. The proceedings are expected to conclude in late summer.

 

 

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