Chatham Asset Management Submits Indicative Bid to Acquire Vericast Corp.

By: Chatham Asset Management, LLC via Business Wire

May 16, 2022 at 08:30 AM EDT

Chatham Would Subordinate Certain Debt Interests and Reduce Company’s Net Leverage by up to 2x

Expects to Refinance Vericast Capital Structure and Lower Company’s Cash Interest Payments by $100 Million to $150 Million Annually

Chatham Asset Management, LLC (“Chatham”), a private investment firm which manages funds that own approximately one half of the outstanding indebtedness of Vericast Corp. (“Vericast” or the “Company”), today submitted an indication of interest to acquire Vericast from MacAndrews & Forbes Incorporated. Chatham anticipates paying a purchase price roughly equivalent to $2.85 billion, the value of the Company's outstanding indebtedness, with any additional payments for equity to be determined following the completion of due diligence.

The full text of the letter follows:

May 16, 2022

Vericast Corp.

15955 LaCantera Parkway

San Antonio, TX 78256

Attention: John O’Malley, Chief Executive Officer

Re: Indication of Interest to Acquire Vericast

Dear Mr. O’Malley,

As you are aware, Chatham Asset Management, LLC (together with its affiliates, “we” or “Chatham”) is a New Jersey-based credit investment firm with extensive investments in the print media and marketing communications industries, including significant investments in R.R. Donnelley & Sons, McClatchy, Postmedia, and Accelerate360.

Chatham has been a longstanding investor in and supporter of Vericast Corp. (the “Company” or “Vericast”). We served as the lead backstop investor in the Company’s multi-billion dollar refinancing transactions in 2020 and 2021. Currently, we own a majority of the approximately $1.2 billion in outstanding principal amount of 11.000% first lien senior secured notes due 2026, and virtually all of the approximately $439 million in outstanding principal amount of 13.000% second lien senior secured notes due 2027. We are also currently invested in the Company’s term loan facility due 2026. In the aggregate, we own almost one half of approximately $2.85 billion in the Company’s outstanding indebtedness.

Accordingly, we are pleased to submit an indication of interest to acquire the Company from MacAndrews & Forbes Incorporated. Based on our existing knowledge of the Company, we anticipate paying a purchase price roughly equivalent to the value of the Company’s outstanding indebtedness, with any additional payments for equity to be determined following the completion of due diligence.

We are prepared to support any financing requirements for this transaction by subordinating some of our debt interests into subordinated notes or equity, thereby reducing the Company’s net leverage by up to 2.0x. With this significant deleveraging and potential additional synergies to be realized with other Chatham portfolio companies, we would anticipate to refinance the capital structure at more favorable rates and lower the company's cash interest payments by approximately $100 million to $150 million per year on a pro forma basis, thereby substantially enhancing the Company’s financial flexibility.

Together with our advisors, we are ready to conduct the due diligence required, negotiate and prepare definitive documentation, and finalize and enter into binding agreements, including financing commitments, in a prompt and expeditious manner. We are prepared to devote considerable resources to completing this transaction. We are confident that with your cooperation we will be able to execute a definitive transaction agreement without delay. Of course, this letter constitutes an indication of interest only and does not create and shall not be deemed to constitute or create any legally binding or enforceable obligations on the part of either of us, until a definitive transaction agreement is executed.

We look forward to your prompt reply.

Sincerely,

/s/ Anthony Melchiorre

Anthony Melchiorre

Managing Member

View source version on businesswire.com: https://www.businesswire.com/news/home/20220515005074/en/

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Chatham Asset Management Submits Indicative Bid to Acquire Vericast Corp.

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