American print group LSC Communications has filed for Chapter 11 bankruptcy protection.
The group made the voluntary filing 2 days ago (13 April 2020).
It affects most of LSC’s US subsidiary businesses, but excludes its operations in Mexico and Canada.
In a statement, LSC said: “The company’s decision follows a comprehensive evaluation of opportunities to reduce its debt and better position LSC to compete and deliver exceptional products and services to its clients. LSC has sufficient liquidity to continue operating its business safely and efficiently and remains committed to serving its clients with the same high standards of quality and reliability they expect.”
LSC has received commitments for $100m (£79.6m) in ‘debtor-in-possession’ financing from some of its revolving lenders, subject to certain closing conditions.
It was formerly part of the giant RR Donnelley business, which split into three companies in 2016.
“Since the termination of our merger with Quad Graphics last year, and given the fundamental changes in the industry, the LSC board and management team have taken proactive and aggressive steps to improve our overall cost structure and streamline our manufacturing platform while continuing to pursue new business opportunities,” stated Thomas Quinlan, LSC chairman and CEO.
“During that time, we have closed, or are in the process of closing, eight facilities, won new contracts and delivered on our commitments to our clients and vendors. At the same time, we continued to evaluate the best path to creating a more sustainable capital structure for LSC with the support of our senior lenders.
“Following a comprehensive review, we determined to pursue a restructuring through a voluntary process as we continue to work with our lenders to best position our business for the future.”
Quinlan said the situation related to Covid-19 “continues to evolve and impact our people, our communities, our clients and our vendors”.
Last month the firm instigated a stockholder rights agreement, or ‘poison pill’ “to guard against tactics to gain control of LSC without paying all stockholders a premium for that control”.
In its Q4 2019 results it reported net sales down 17.1% at $778m, with ‘organic’ sales adjusted for foreign exchange and pass-through paper sales down 14.1%. The net loss for the period ballooned to $169m, compared to a $16m loss the prior year.
The group has short- and long-term debt of more than $900m.
LSC exited the European printing market when Walstead Group acquired its Polish business in 2018.
Shares in LSC Communications fell by nearly 30% to a new all-time-low of $0.027 in early trading today.