Quebecor World Inc. failed to snag $125 million in new financing demanded by its lenders, sending the printing giant’s stock into a tailspin amid worries that it’s on the brink of collapse.
The banks, pressuring the company to refinance its loans, are now faced with either granting a week extension to let executives drum up more cash, accept a financing plan that leaves lenders vulnerable if the company goes belly-up or send the company on a path to bankruptcy protection.
At the same time, the company announced that it would not pay $19.5 million in interest on a $400 million bond. Quebecor has up to 30 days to issue a check before the loan falls into default.
It also declined to pay fees associated with the bank’s refinancing waivers.
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“The company believes it must preserve cash and this payment would not be in the best interests of all of the company’s stakeholders,” according to a statement issued Tuesday.
Quebecor World runs a 900-employee print shop on Cooper Avenue that prints Newsweek, Time and other major magazines.
As the company’s financial meltdown continues, employees at the local plant worry about their future with some hunting for jobs elsewhere, a former employee with ties to workers said.
Four pre-press positions, employees who get projects ready to print, were eliminated last week at the $151.6 million plant because the company anticipates less work in coming months.
The former employee, fired a few months back, asked that his name not be used because he was interested in getting his job back, should the company rebound and hire on more workers.
A contract to print the AT&T Yellow Pages was lost two years ago to Chicago-based competitor RR Donnelley, and the last directories are set to be printed this month, he said.
Also, the Economist magazine took its business to a different Quebecor plant and Pottery Barn is growing frustrated with the Merced operation, he explained.
“(Merced) was supposed to be the power plant,” he noted. “Guys are telling me they’re going into work with nothing to do. They’re stressing.”
Read more in Thursday's Merced Sun-Star.