News

The financial crisis deepened at Quebecor World late Tuesday when the printing company missed deadlines for debt repayments.
By failing obtain $125-million (U.S.) in new financing by a Jan 15 deadline and opting not to make a scheduled $19.5-million interest payment on its bonds, the Montreal-based company is going to the wall with banks, debt holders and sponsors of the company’s securitization program, who are now in a position to pull that credit.
Quebecor World is trying to win lender support for a $400-million rescue financing package from parent Quebecor and Tricap Partners Ltd., a restructuring fund run by Brookfield Asset Management. Banks object to the deal because it would introduce new debt in the company that ranks above existing loans.
While news of the standoff was not unexpected, the price of Quebecor World bonds dropped sharply on Tuesday on fears that lenders would force the company to file for creditor protection.
To keep its securitization program in place, Quebecor World asked lenders and sponsors for another week. Quebecor World said lenders asked for “significant” fees to extend the deadline. The printer “declined to pay the significant waiver costs requested by its banking syndicate for this waiver, as the Company believes it must preserve.”
Negotiations with banks and other creditors owed a total of $2.5-billion by the printer are still going on. After skipping the interest payment Tuesday, Quebecor World will be in default to its bondholders in 30 days.
Bankers familiar with these talks continue to say that the most likely outcome for Quebecor World is a creditor protection filing. That would see parent Quebecor lose control of a printer founded by the father of chief executive officer Pierre Karl Péladeau.