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Valassis Completes Refinancing of Senior Secured Credit Facility

Press release from the issuing company

LIVONIA, Mich., Valassis, one of the nation's leading media and marketing services companies, announced today that it has completed the refinancing of its existing senior secured credit facility with a new $400 million senior secured credit facility. The new facility consists of a $300 million term loan and a $100 million revolving line of credit, of which $50 million was drawn at the closing. We used the proceeds of the new credit facility along with existing cash to repay and terminate the outstanding $462.2 million in term loans and the $50 million revolver, which was undrawn, and to pay related fees and expenses. The interest rate on the new term loan and revolver is grid-based and starts at LIBOR plus 175 basis points. The new credit facility will mature in June 2016, with only the term loan amortizing on a quarterly basis at 5% during each of the first two years, 10% during the third year, 15% in the fourth year and 11.25% in the fifth year, with the remaining 53.75% due at maturity.

We believe the new credit facility provides us greater flexibility in certain circumstances to use our cash flow for the benefit of our shareholders, and the terms better reflect our improved debt-to-earnings ratio. A one-time, non-cash charge of approximately $5.8 million ($3.5 million, net of tax), resulting from the write-off of unamortized fees related to the senior secured debt refinanced and termination of hedge accounting on the related interest rate swap, will negatively impact second quarter 2011 earnings per share (EPS) by approximately $0.07. We expect the refinancing will have a positive impact on future interest expense which we will discuss when we release second quarter earnings.

We will file a copy of the credit agreement as an exhibit to a Current Report on Form 8-K with the Securities and Exchange Commission.


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