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Vertis Files Chapter 11, Will Merge With Competitor

Wednesday, July 16, 2008

Press release from the issuing company

BALTIMORE (July 15, 2008) – Vertis Communications today announced that as a result of the strong support received for its prepackaged plan of reorganization (the "Plan"), the company instituted the second phase of its strategy and commenced voluntary proceedings under Chapter 11 of the U.S. Bankruptcy Code to seek confirmation of the Plan.  Once the Plan becomes effective, Vertis will consummate its previously announced merger with American Color Graphics.

One hunderd percent in dollar amount and 100 percent in number of holders of Vertis' 9.75 percent Senior Secured Second Lien Notes due 2009, 98.6 percent in dollar amount and 98.3 percent in number of holders of Vertis' 10.875 percent Senior Notes due 2009 and 100 percent in dollar amount and 100 percent in number of holders of Vertis' 13.5 percent Senior Subordinated Notes due 2009 (collectively, the "Vertis Notes") that voted on the Vertis Plan voted to approve the Plan.

"Today's actions are a result of the noteholders' continuing strong support of our merger with American Color Graphics and financial restructuring plan," said Mike DuBose, chairman and CEO of Vertis. "The restructuring under the Plan will allow the company to dramatically reduce debt and interest cost, complete its reorganization and merger in just a few short months, and refocus investments into the business."

DuBose added, "Building on the operational improvements initiated 18 months ago, this financial restructuring and merger is the next step in our turnaround strategy, which has gained tremendous support from stakeholders, employees, customers and vendor partners. The strong support of this plan should facilitate completing the restructuring and merger by late summer so we can immediately begin the implementation of our integration plans with American Color Graphics, allowing us to further leverage our combined best-in-class products, services and employees."

Vertis anticipates it will receive court authority to pay employee wages and benefits without interruption and continue to pay trade creditors and suppliers in the ordinary course of business. The Chapter 11 reorganization is expected to conclude in 60 days.

The focal point of the Plan is the agreement between Vertis and American Color Graphics, two of the largest printing and premedia companies in North America, to merge American Color's operations into Vertis' nationwide marketing and printing services platform. The merger will allow both companies to enrich their core manufacturing capabilities relevant to the production of advertising inserts and newspaper products. It will also enable them to make available an unprecedented scope of premedia and workflow solutions to their customers.

In conjunction with the prepackaged Chapter 11 cases, Vertis has obtained $380 million in debtor-in- possession financing from GE Commercial Finance.  The DIP financing will provide the company with sufficient liquidity until the prepackaged plan is consummated.  Vertis has also obtained commitments for $650 million in exit financing, which will become effective upon consummation of the prepackaged plan and fund the combined company's working capital needs.  The company anticipates that the exit financing will consist of a $250 million Senior Secured Revolving Credit exit facility with GE and a $400 million exit facility with Morgan Stanley Senior Funding, Inc.

American Color Graphics also commenced voluntary Chapter 11 proceedings and filed its own prepackaged plan (the "ACG" Plan) after more than 99.9 percent in dollar amount and 95.3 percent in number of its 10 percent Senior Secured Second Lien Notes due 2010 that voted on the ACG plan voted to approve it.

These consensual financial restructurings will reduce the combined company's debt obligations (including the off-balance sheet accounts receivable facility and approximately $248 million of Vertis Holdings Mezzanine Notes) by approximately $1 billion before transaction fees and expenses.  The noteholders of Vertis and American Color Graphics will exchange their bonds for an aggregate of $550 million in new notes and substantially all of the new equity in the merged company.

"The Plan filed today, once effective, should enable the new Vertis Communications to have a long and prosperous future," DuBose noted. "It's an exciting time for the company, our business partners, customers, suppliers and employees."

Vertis filed its voluntary Chapter 11 petitions and plan in the U.S. Bankruptcy Court for the District of Delaware in Wilmington, as did American Color Graphics.  Information about the case can be found on http://www.vertisinc.com, "Vertis Reorganization," and by calling 866.671.8107.




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