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Merrill Corporation Completes Recapitalization: Debt No Longer in Default

Monday, August 26, 2002

Press release from the issuing company

ST. PAUL, MINN. - August 26, 2002 -- Merrill Corporation, a global diversified communications and document services provider, announced on August 15th the completion of its recapitalization. All defaults under its senior credit facilities have been completely waived or cured. In addition, certain financial covenants have been reset and other terms of the senior credit facilities have been modified. All of Merrill's outstanding 12% Senior Subordinated Notes due 2009 have been exchanged or redeemed for newly issued Class A Senior Subordinated Notes due 2009, Class B Senior Subordinated Notes due 2009, and Series A Warrants. As part of the recapitalization, Merrill's largest shareholder, DLJ Merchant Banking Partners II, LP, invested an additional $18.5 million in Merrill through the purchase of 13% Senior Discount Notes due 2008. The Company's existing senior discount noteholders and senior preferred shareholders have also agreed to amend certain rights in their securities as part of the recapitalization. "The completion of our recapitalization allows us to focus 100 percent of our energy and expertise on our financial, legal and corporate clients," said John Castro, president and CEO of Merrill. "As always, our management team and dedicated employees remain committed to providing our clients the best service, technology and information systems the industry has to offer." Christopher Pears, Wayland Advisors Inc. and Merrill's largest senior credit holder, said, "We at Wayland Advisors have been impressed with the performance of Merrill's management team during the difficult market environment of the last two years. We look forward to working together with John Castro and his team in the future." Douglas Martin, a vice president at Chanin Capital Partners, and the financial advisor to the senior subordinated noteholders, agreed. "We are pleased to have assisted Merrill in successfully completing its nearly 18-month journey through the financial restructuring process," Martin said. "The financial performance of the company throughout the process is a testament to the efforts of Merrill's employees and management and is a terrific indication of the noteholders' confidence in Merrill's future." Merrill Corporation is a diversified communications and document services company applying advanced information systems and intranet/Internet technology to provide a wide range of services to its financial, legal and corporate clients.




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