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Quad/Graphics Closes $1.5 Billion Debt Offering

Press release from the issuing company

SUSSEX, Wis. – Quad/Graphics announced that it has closed an offering of $1.5 billion consisting of a five-year $850 million revolving line of credit (the "Revolver"), a five-year $450 million bank term loan A (the "TLA"), and a seven-year $200 million term loan B (the "TLB").

"Our strong cash flow and progress on the Worldcolor integration have enabled us to make significant progress in our efforts to deleverage over the past year," said John Fowler, Quad/Graphics Executive Vice President and Chief Financial Officer. "Our improved balance sheet metrics combined with improvements in the credit markets made this an ideal time to refinance. We are pleased with the strong support we received from both existing and new bank partners as well as investors in the institutional term loan market. As a result of this support, the debt was substantially oversubscribed, which allowed us to tighten the original issuance discount and LIBOR floor as well as create more capacity under the bank portion of the agreement. This comprehensive refinancing has provided us additional financial flexibility, increased our borrowing capacity under our Revolver, extended our maturities and reduced our cost of borrowing. We believe the new credit facility provides a solid financing structure to support our future growth plans."

At the Company's current leverage ratio, the borrowing spread on both the Revolver and TLA is LIBOR +225 basis points. The borrowing spread on the TLB is LIBOR +300 basis points, subject to a 100 basis point LIBOR floor. The Company estimates that the pricing under the new agreement will reduce interest payments by $16-20 million annually, with a payback on the costs to refinance the agreement at well less than one year.

Quad/Graphics intends to use the $650 million net proceeds from the TLA and TLB as well as approximately $170 million borrowed under the new Revolver, to pay off the Company's existing term loans and revolver borrowings.

J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, U.S. Bank National Association, PNC Capital Markets LLC and SunTrust Robinson Humphrey, Inc. were the Lead Arrangers of the credit facilities.


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