Workflow Management is talking to third parties looking to help it deal with a $50 million "B" loan due this December that the company does not think it can repay. The printing company has been contacted by entities such as private equity firms and various funds, responding to the maturing "B" loan, said Michael Schmickle, executive v.p., cfo and secretary of Workflow. "We are proactively trying to extinguish the $50 million term note," Schmickle said. "There's no one that we are excluding," he added, noting that Workflow is open to any potential savior that can help the company. "We would consider all alternatives," including new banks, he further added.
The term loan was put in place last January and its pricing increases quarterly throughout the year, inching up from LIBOR plus 11% to a hefty LIBOR plus 14% at the time repayment is due (LMW, 1/27). The company's operating cash flow is too anemic to support its debt, the company reported.
Schmickle would not cite the funds or firms that have approached Workflow, but he confirmed that the company is exploring alternatives to improve its capital structure. Those alternatives include refinancing the credit, an acquisition of the whole company or a going-private transaction at a premium to the current stock price. Workflow announced last week that its independent auditors will note in an upcoming quarterly earnings release that there is "uncertainty about the company's ability to continue as a going concern."
FleetBoston Financial leads the Palm Beach, Fla.-based company's $180 million credit and Schmickle would not state if a refinancing with the lead lender was an option. Fleet bankers did not return calls. This deal was put in place to ease covenant pressures back in January. The credit also has a $100 million asset-based revolver priced at LIBOR plus 5% and a $30 million "A" loan priced at LIBOR plus 8%. Bank One, Bank of America, Comerica Bank and Union Bank of California are also agents on the deal. Jefferies & Co. is advising Workflow on the company's actions going forward.