ComicBitsOnline.com

 Terry Pavlet has passed an item along that ties in with my recent articles on comic pricing and recession.  Interesting that there have been rumours of Marvel,at least,looking around for new printers?

Here is something that everyone should read and be VERY surprised if they don’t go under. Did post this under all of my groups as well. Think about it. 

Terry Pavlet 

“QUEBECOR’S ROCKY FINANCIAL ROAD-  

….a behind the scenes comics business story has been playing out that might have ramifications – the financial straits of QuebecorWorld, the Canadian-based printer responsible for printing the bulk of the comics that make up the American direct market, including those published by Marvel, DC and many other comic publishers. 

For the last year, Quebecor’s financials have been under the strain of a $2.5 billion debt, changes due to the Canadian vs. American dollar (the rising Canadian dollar making American-based printing aviable option for some clients), and increasingly low cash reserves. Throughout last year, Quebecor declined to refinance its debt or settle upon a plan with a lender to avert what many saw as a looming cash crisis as debt payments were coming due. 

Late last week, word came that Quebecor World is working on a (contested) $400 million (Canadian) cash bail out provided by its parent company Quebecor Inc,and a private equity fund managed by Brookfield Asset Management, but on Tuesday, the printer said that it had “failed to obtain $125 million of new financing required under waivers from its banking syndicate and missed a debt payment on $400 million of notes,”according to Reuters. Additionally, Quebecor World did not make a $19.5 million payment of interest due which was also due on Tuesday. While the failure to obtain the $125 million or failure to make the payment does not put Quebecor World into default on its debt, but the news was not taken well by the stock market, as The Financial Post reported that Quebecor World shares on the Toronto Stock Exchange fell by 62% yesterday to close at 18.5¢. Trading of QW shares were suspended on the New York Stock Exchange for a period earlier this month its per share price dipped below the NYSE’s$1.05 threshold. The TSX has placed Quebecor World under review and is giving the company 30 days to regain compliance or face delisting. The Financial Post reports that the company has 30days to “cure the non-payment” in regards to the missed $19.5 million payment, and quoted UBS analyst Eric Mencke as saying that “The bank is now in a position to force [the firm] to file for protection,”adding that the banks would wait until January 24th,the expiration of a 90 day grace period the banks granted Quebecor World last fall. The Post also quoted an unnamed source who claimed that the banks would not push Quebecor World into bankruptcy. 

Standard & Poors has reduced the company’s credit rating to D for “default.” 

As for what may come? From the Post: Late Wednesday,Quebecor World said its parent and Brookfield’s Tricap Partners unit had extended the deadline on their rescue offer until 9 a.m. this coming Sunday and said the two “have indicated that they have made progresson the satisfaction of  “conditions they required before making their investment. But the two “have requested additional time,” the printer said. It gave no indication in the press release where it stood intalks with its bankers.

In addition, the banks face losses in case of a filing, as more than US$500-million of the printer’s credit line is unsecured. Quebecor World has been at the brink of collapse since last month, when a complex refinancing fell apart, as well as a deal to sell its European assets. 

What does this mean for comics? Not much. At least on the reader end. Are the appropriate parties from DC and Marvel aware of what’s going on at Quebecor? Sure.Are they worried, or looking to set books up at other printers? Probably not. 

Despite the rough seas it’s currently navigating,Quebecor is a huge, multinational corporation, and while what’s going on in regards to its finances isn’t ideal, desirable or even normal, it’s not unprecedented or a direct route to the end of the business. At the end of the day, Quebecor World will refinance its debt and move on (albeit with a limp,most likely) or it will further weaken, and be bought out by a competitor who will work to keep its accounts. Now, if that happens, there is a question about pricing pressure due to reduced competition, but even that’s still a far way off if it ever comes to pass.”