Cenveo emerges from Chapter 11 protection

November 2018 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

November 2018 Issue

Cenveo emerged from Chapter 11 bankruptcy protection in September with a greatly reduced debt pile, a strong balance sheet and a new board of directors.

The Stamford, Connecticut-based envelope manufacturing company emerged around nine months after it announced it was filing for a pre-packaged bankruptcy in the Southern District of New York, White Plains, with a debt burden of more than $1bn and sharply lower sales amid the shift from paper products to digital technology. At the time of its bankruptcy filing, Cenveo said that it had annual debt payments of about $99.4m and its “funded debt obligations are unsustainable”.

Following its bankruptcy, the company, which will be known as Cenveo Worldwide Limited, will be privately held. As a result of its restructuring, Cenveo will benefit from a strong balance sheet. The company has reduced its debt pile from around $1.1bn to approximately $300m. It has also created an excess of $65m of liquidity and secured around $235m of term loan exit financing.

“Today marks the beginning of an exciting new chapter at Cenveo as we emerge a stronger company,” said Robert G. Burton, Jr., chief executive at Cenveo. “With a significant reduction of debt and increased financial flexibility, Cenveo will be able to invest in growing our core businesses and continue our focus on delivering high-quality products. I would like to express my appreciation to our vendors, employees, customers and creditors for their support as we completed our successful restructuring, and we look forward to continuing to strengthen our relationships.”

Cenveo’s restructuring plan was approved by an overwhelming majority of its entire creditor body in the summer. Approximately 97 percent of the company’s first lien secured noteholders, 100 percent of its second lien noteholders, including the largest holder, Brigade Capital Management, and approximately 91 percent of general unsecured creditors, all voted to approve the plan.

The approved plan made substantial changes to the initial settlement agreement. Under the new plan, a $7m cash pool will be established for general unsecured and second lien creditors, a considerable increase from the $1.5m fund stipulated in the original plan. A $50m cash payment will be made to Allianz for its senior secured notes and to gain its support for the plan. The company also reached a revised agreement with its first-lien holders to reduce the amount of debt issued from $200m to $100m upon the company’s exit from bankruptcy.

Qualified pre-bankruptcy pension and unexpired collective bargaining agreement obligations will be assumed by Cenveo under the new plan. The company will also pay $400,000 to the unsecured notes indenture trustee and appoint a claims oversight monitor.

The original plan attracted objections from Brigade Capital Management which alleged that Cenveo’s shareholders, officers and directors had engaged in “insider deal-making”.

The newly restructured company will see Mr Burton succeed his father as chief executive while Michael G. Burton will serve as president. The company will form a new board of directors, comprised of Mr Burton and four other directors – James Continenza, Matthew Espe, Frank Sklarsky and Thomas Oliva. Mr Continenza, who will serve as chairman, said, “I look forward to working with and alongside the new board members and the Cenveo management team as we look to a bright future for this strong organisation.”

Mr Burton added: “To the entire Cenveo team, you have my sincerest thanks and gratitude. Throughout this process you have all demonstrated what commitment stands for, and, with your hard work and dedication, we are emerging in a position to grow and strengthen our company. Mike and I, and the entire Cenveo management team are honoured to lead our team as we work together to take Cenveo to the next level.”

Richard Summerfield