Quebecor strives to exit creditor protection

Quebecor World has reported that it continues to progress towards exiting creditor protection in the United States and Canada.

In the third quarter, the Company continued its focus on improving efficiency across all its business groups by reducing costs, improving processes and maximising the performance of its manufacturing platform.

In the third quarter, the Company and its advisors met with various stakeholders, including creditors' committees, as it continued to develop a plan of arrangement to exit creditor protection under the CCAA and Chapter 11 processes.

On 29 September, the company received court approval to proceed with the claims process.

The Claim Bar date is 5 December 2008, by which time creditor claims must be received.

The company has been operating under creditor protection since its initial filing on 21 January 2008 in the US and Canadian courts.

As stated in the Monitor's report of 23 September 2008, the company had an unrestricted cash balance of USD125m at 14 September 2008, which is USD41m higher than its forecast from the Monitor's report of 14 July 2008.

In addition, the company has USD105m of restricted cash balances.

It continues to have access to the revolving loan facility of up to USD400m and has drawn only USD25m.

Quebecor World's results in the third quarter 2008 are based on continuing operations, following the sale of its European business on 26 June 2008.

In the third quarter, the company generated consolidated revenues from continuing operations of USD1bn, compared with USD1.2bn in 2007.

Operating income before impairment of assets, restructuring and other charges (IAROC) in the third quarter was USD33.7m compared to USD57.9m in the third quarter of 2007.

Adjusted EBITDA was USD94.2m in the third quarter of 2008 compared to USD123.5m in the third quarter of 2007.

The lower adjusted EBITDA in 2008 is principally due to decreased volumes, plant closures and the economic slowdown affecting all of our sectors.

Despite a lower level of activity than planned, the company's adjusted EBITDA results in the third quarter and year-to-date continue to be in line with management's expectations and with projections for DIP financing.

The company generated USD4.1m of positive free cash flow in the third quarter and USD88.7m year-to-date, compared with negative free cash flow during the same periods in 2007.

This was achieved despite substantial costs for professional fees and other expenses related to the creditor protection process.

In the quarter, the company continued to look for additional means to reduce costs, to offset lower volumes due to the challenging economic environment.

In the third quarter, selling, general and administrative expenses decreased by 18.4 per cent, excluding the unfavourable impact of foreign exchange, compared with the same period last year.

Also in the third quarter, the Company continued to focus on providing its customers with the ability to use brands and identifying marks on their products, to show they are being produced in an environmentally responsible manner.

Quebecor World recently began offering its customers the option to use an Enviroink logo on their printed products, to signify that they are using heat-set inks that contain a minimum of 20 per cent by weight renewable resources.

They can also use the Chain of Custody Certification for the world's three leading forest management programmes.

These are the Forest Stewardship Council (FSC), Sustainable Forestry Initiative (SFI) and the Programme for the Endorsement of Forest Certification (PEFC).

In the third quarter, Quebecor World reported a net loss from continuing operations of USD63.6m or USD0.35 per share compared to USD55.3m or USD0.45 per share in the third quarter of last year.

Third quarter results included IAROC net of income taxes of USD5.1m or USD0.03 per share, compared to USD35.7m or USD0.27 per share in the same period in 2007.

For the first nine months of 2008, Quebecor World reported a net loss from continuing operations of USD289.9m or USD1.72 per share, compared to a net loss from continuing operations of USD34.8m or USD0.39 per share for the same period in 2007.

The results for the first nine months of 2008 incorporate IAROC net of taxes of USD47.8m or USD0.27 per share compared to USD66.1m or USD0.5 per share in 2007.

Excluding IAROC, adjusted diluted loss per share from continuing operations was USD1.45 for the first nine months of 2008 compared to adjusted diluted earnings per share from continuing operations of USD0.11 in the same period of 2007.

On the same basis, adjusted operating income in the first nine months of 2008 was USD70.7m compared with USD144.4m in 2007.

Consolidated revenues for the first nine months of 2008 were USD3bn compared with USD3.4bn in the same period of 2007.

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