Vertis extends withdrawal period for 13½%, 18½% notes exchange offers; offer payout, terms amended

By Jennifer Chiou

New York, Aug. 19 - Vertis Holdings, Inc. announced that its operating subsidiary, Vertis, Inc., has made available important supplemental materials regarding amendments to its private tender offer, exchange offer and consent solicitation for its 13½% senior pay-in-kind notes and the private exchange offer and consent solicitation for its 18½% senior secured second-lien notes due 2012, thus prompting the extension of the withdrawal rights for participating holders.

Holders may now withdraw tendered notes and revoke consents until noon ET on Aug. 23.

The prior withdrawal period began at 9 a.m. ET on July 29 and expired at 5 p.m. ET on Aug. 2.

Supplemental materials

According to a company release, the supplemental materials contain important information relating to Vertis' business condition and results of operations, including results for the quarter ended June 30.

Holders of the 13½% notes may visit the eligibility website at bondcom.com/vertisPIK or contact the information and exchange agent (number below),

Eligible holders of the 18½% notes may visit bondcom.com/vertis2ndLien or contact the information agent.

Holders released

In connection with the previous reinstatement of withdrawal rights, Vertis decided to release holders who have entered into support agreements to participate in the offers from those agreements so that they may withdraw their notes if desired.

The company already reinstated the withdrawal rights in connection with the prior release of supplemental materials that update the $1.1 billion refinancing of substantially all of its outstanding secured and unsecured debt, including its $225 million revolving credit facility.

The other supplemental materials include information relating to Vertis' business condition and results of operations, changes to the terms of some of the refinancing transactions and the potential use of an early settlement in connection with the tender offers.

Subject to the consummation of the refinancing transactions, Vertis may accept any notes that have been tendered on an early acceptance date. The company previously said it expects to exercise this option but would only do so after the withdrawal period has passed.

At 5 p.m. ET on July 26, investors had tendered $204.9 million principal amount, or 85%, of 13½% notes and delivered the related consents. Of that amount, about $177 million principal amount was tendered for stock and about $27.9 million principal amount was tendered for cash.

Holders also had tendered $362.4 million principal amount, or 95%, of the 18½% notes and delivered consents.

The figures are unchanged from midnight ET on June 25.

The offers began on April 16 and will expire at 5 p.m. ET on Aug. 31. They have been extended multiple times and may be further extended. The company canceled its 13½% notes exchange offer in February after failing to meet the minimum tender condition.

The company needs valid tenders from holders of at least 95% of each notes series.

13½% notes offers

Vertis is now offering to exchange 2,022.866 shares, up from 784.377 shares, for each $1,000 principal amount of 13½% notes.

Details on this are included in the supplemental materials.

The exchange is only open to qualified institutional buyers or accredited investors.

Vertis added that it is no longer offering the consent fee of $5.00 for each $1,000 principal amount of notes.

The company is also tendering for the notes that are not eligible for the exchange offer.

Vertis said it is now offering in its tender offer for the senior notes, $50.00 for each $1,000 principal amount of notes tendered by the deadline. It had said that it would pay $400 for each $1,000 principal amount of notes, including a $50.00 early tender payment.

The offers were previously amended so that all holders will receive the same payment regardless of when they tender their notes. Before, holders who tendered by April 28 were to receive a higher cash payment.

The company is also soliciting consents to amend the indenture to remove substantially all of the restrictive covenants and some events of default, and it was to pay $5.00 per $1,000 principal amount for those who delivered consent by 5 p.m. ET on April 28.

Vertis is seeking consents from holders of a majority of notes. It added that it will fund the offer from a private placement of shares to Avenue Capital Group.

18½% exchange offer

Vertis' private exchange offer involves the issue of new 13% senior secured notes due 2016.

As described in detail in the supplemental materials, Vertis is now offering to exchange an equal amount of the new notes for existing second-lien notes.

The company had been offering to exchange $393.73 principal amount of the new notes and $591.27 of cash for each $1,000 principal amount of 18½% notes.

Before the offer was first amended, holders who tendered after the early deadline would have received $393.73 principal amount of new notes and $561.27 of cash for each $1,000 principal amount of 18½% notes.

The company is also soliciting consents to amend the indenture to eliminate substantially all of the restrictive covenants and some events of default and related provisions. It needs consents from holders of at least 75% of the notes.

The offer is also subject to holders not affiliated with Avenue Capital tendering at least 15% of each series of notes.

Bondholder Communications Group, LLC (212 809-2663) is the information and exchange agent.

Baltimore-based Vertis provides print advertising and marketing services.

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