CHICAGO–(BUSINESS WIRE)–R.R. Donnelley & Sons Company (“RRD” or the “Company”) today announced the pricing and allocation of a 5-year $1.25 billion senior secured term loan B (the “New Term Loan”).
The New Term Loan will bear interest, at the Company’s option, at adjusted term SOFR plus a margin of 7.25% (subject to a floor of 0.75%) or ABR plus a margin of 6.25%, which margins are subject to a 0.50% step-down if the Company’s first priority secured leverage ratio is equal to or less than 2.00 to 1.00 and an additional 0.50% step-down if such ratio is equal to or less than 1.50 to 1.00. The new Term Loan is expected to be issued at 97.0% of the principal amount.
Subject to customary exceptions, the New Term Loan will be guaranteed by the Company’s wholly owned domestic subsidiaries and secured by a first priority lien on, among other things, the Company’s material owned real estate assets, intellectual property and the equity interests of certain subsidiaries, which assets also secure the Company’s existing 6.125% senior secured notes due 2026 on a pari passu basis. The New Term Loan will also be secured by a second priority lien on the accounts receivable, inventory and other assets that secure the Company’s asset based lending facility (the “ABL Facility”) on a first priority basis.
The Company plans to use the proceeds from borrowings under the New Term Loan, together with up to $5.0 million of cash on hand and/or borrowings under the ABL Facility, to (i) refinance all of the outstanding indebtedness under the Company’s existing term loan B facility, (ii) redeem in full all of its outstanding 6.50% senior notes due 2023 and 6.00% senior notes due 2024, (iii) make a dividend to its indirect parent, RRD Parent, Inc., to permit such parent to use the proceeds of such dividend to redeem a portion of its outstanding 10.00% senior notes due 2031 (the “Holdco Notes”), and (iv) pay fees and expenses in connection with the foregoing and certain related transactions. Closing of the New Term Loan is subject to the satisfaction of certain customary closing conditions.
In connection with the entry into the New Term Loan, certain investment funds affiliated with the Company’s sponsor intend to exchange not less than $114 million aggregate principal amount of certain of the Company’s outstanding senior notes and debentures held by such funds for newly issued Holdco Notes.
RRD is a leading global provider of marketing, packaging, print, and supply chain solutions that elevate engagement across the complete customer journey. The Company offers the industry’s most trusted portfolio of creative execution and world-wide business process consulting, with services designed to lower environmental impact. With 22,000 clients, including 93% of the Fortune 100, and 32,000 employees across 28 countries, RRD brings the expertise, execution, and scale designed to transform customer touchpoints into meaningful moments of impact.
For more information, visit the Company’s web site at www.rrd.com.
Use of forward-looking statements
This news release includes certain “forward-looking statements” within the meaning of the federal securities laws, including with respect to the use of proceeds from borrowings under the New Term Loan and the expected closing of the New Term Loan. Statements that are not historical facts, including statements about RRD’s management’s beliefs and expectations, are forward-looking statements. Words such as “believes,” “anticipates,” “estimates,” “expects,” “intends,” “aims,” “potential,” “will,” “would,” “could,” “considered,” “likely,” “estimate” and variations of these words and similar future or conditional expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. While RRD believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond RRD’s control. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend upon future circumstances that may or may not occur. Actual results may differ materially from those in the forward-looking statements and may vary from RRD’s current expectations depending upon a number of factors. These factors include such risks and uncertainties detailed in RRD’s periodic reports to investors and in other investor communications of RRD from time to time. RRD does not undertake to and specifically disclaims any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect future events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
Eric Hess, VP Treasurer