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Polestar agrees to recapitalization plan, Debt holders to be new owners

Press release from the issuing company

Dec 8, 2006 -- Polestar Group, Europe's leading independent printing company, has received the unanimous support of its senior secured lenders for a recapitalisation and restructuring of the business. The transaction, which is expected to complete on Tuesday 12 December 2006, has been structured with a view to ensuring Polestar is well placed to maintain its leading position in the printing market. The existing senior secured lenders, a group of financial institutions, will become the new owners of Polestar as part of the transaction. They will convert 67% of the total outstanding amounts owed under the existing Term A, Term B and Revolving Credit Facilities in consideration for 100% of the equity in the Group. The debt equity conversion will be structured through a newly incorporated company being formed to acquire the Group. The previous owner of Polestar will no longer have an equity interest in the Group. The recapitalisation provides the business with a new sustainable capital structure - the Group will reduce its total outstanding debt from £814 million to £257 million (which includes existing finance leases of under £105 million and new facilities of £145m). The new facilities comprise three tranches of debt: a new Term A facility of £40m, a new Term B facility of £40m and a new £50m Tranche 2 facility. In addition to the term facilities, a new working capital facility of £15 million will be provided by the existing senior secured lenders. Tranche 2 will include £35 million of new money. The balance of the Tranche 2 debt and new Term A and B facilities will be rolled over from the existing facilities. As part of the recapitalisation, Polestar will cease to be the sponsor of the pension scheme but the scheme will continue as a closed scheme (having closed to scheme members in April 2006). The Pension Regulator has issued a clearance statement for this pension scheme proposal. The intention is both that the scheme will be eligible for future entry into the Pensions Protection Fund (if necessary) and that members' entitlements under the scheme will not be changed as part of this transaction. Polestar has agreed to cash contributions totalling £45 million to the scheme over a twelve year period. Commenting on this, Polestar's CEO Barry Hibbert said: "The completion of the restructuring has greatly strengthened Polestar. The recapitalisation provides the business with a stable platform which will allow it to focus on the opportunities in the market place."