UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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| Item 1.01 | Entry into a Material Definitive Agreement. |
On April 28, 2021, R.R. Donnelley & Sons Company, a Delaware corporation (the “Company”), closed the previously announced offering by the Company of $400 million in aggregate principal amount of 6.125% Senior Secured Notes due 2026 (the “Notes”) to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A, and outside of the United States pursuant to Regulation S, under the Securities Act of 1933, as amended (the “Securities Act”). The Notes were issued pursuant to an indenture (the “Indenture”), dated as of April 28, 2021, among the Company, the Guarantors (as defined below) and U.S. Bank National Association, as trustee and as notes collateral agent.
The Company used the net proceeds from the offering to repay approximately $338 million aggregate principal amount of the loans outstanding under the Company’s existing term loan B credit facility (the “Term Loan Facility”), with the remainder to be used to repay a portion of the borrowings (without a reduction in commitments) under its amended and restated senior secured asset-based revolving credit facility (the “ABL Credit Facility” and, together with the Term Loan Facility, the “Senior Secured Credit Facilities”) and for general corporate purposes.
The Notes will mature on November 1, 2026. Interest is payable on the Notes semi-annually in arrears at an annual rate of 6.125% on May 1 and November 1 of each year, beginning on November 1, 2021.
Guarantees
The Notes are fully and unconditionally guaranteed on a senior secured basis by the Company’s domestic, wholly-owned subsidiaries (collectively, the “Guarantors” and such guarantees, the “guarantees”) that guarantee the Senior Secured Credit Facilities.
Security
The Notes and the guarantees are secured by security interests (1) on a first-priority basis in all of the Company’s and the Guarantors’ assets securing the Term Loan Facility on a pari passu basis with the Term Loan Facility (such assets, other than the assets securing the ABL Credit Facility, the “Notes Priority Collateral”), and (2) on a second-priority basis in all of the Company’s and the Guarantors’ assets securing the ABL Credit Facility on a first-priority basis (the “ABL Priority Collateral” and, together with the Notes Priority Collateral, the “Collateral”), on a pari passu basis with the Term Loan Facility, in each case, other than any excluded assets, and are subject to intercreditor agreements.
Ranking
The Notes and the guarantees are the general senior secured obligations of the Company and the Guarantors and rank pari passu in right of payment with the Company’s and the Guarantors’ existing and future senior indebtedness, including the Senior Secured Credit Facilities and the Company’s existing senior notes and debentures (the “Existing Senior Notes”), are senior in right of payment to all future subordinated indebtedness of the Company and the Guarantors and are effectively senior to any existing and future unsecured indebtedness of the Company and the Guarantors’ (including the Existing Senior Notes) to the extent of the value of the Collateral. The Notes and the guarantees rank effectively equal to all of the Company’s and the Guarantors’ existing and future indebtedness secured by a pari passu lien on the Collateral (including the Term Loan Facility), to the extent of the value of such assets, are effectively subordinated to all of the Company’s and the Guarantors’ existing and future indebtedness secured by a prior lien on the Collateral (including the ABL Credit Facility), to the extent of the value of such assets, and are structurally subordinated to all of the existing and future indebtedness and other liabilities, including preferred stock, of existing and future subsidiaries of the Company that do not guarantee the Notes.
Redemption
Prior to November 1, 2023, the Company may, at its option, in whole or in part, redeem all or a portion of the Notes at a redemption price equal to 100% of the principal amount of the Notes plus a “make-whole” premium, plus accrued and unpaid interest, to, but excluding, the date of redemption. In addition, prior to November 1, 2023, the Company may, at its option, on any one or more occasions, redeem up to 40% of the then outstanding aggregate principal amount of the Notes at a redemption price equal to 106.125% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, to, but excluding, the date of redemption, with the net proceeds from certain equity offerings.
2
On or after November 1, 2023, the Company may, at its option, in whole or in part, or any one or more occasions, redeem the Notes at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, to, but excluding, the date of redemption, if redeemed during the twelve-month period beginning on November 1 of each of the years indicated below:
| Dates | Percentage | |||
| 2023 |
103.063 | % | ||
| 2024 |
101.531 | % | ||
| 2025 and thereafter |
100.000 | % | ||
Upon a Change of Control, as defined in the Indenture, the Company is required to offer to purchase all of the Notes then outstanding at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the purchase date. If the Company sells certain assets, under certain circumstances, the Company will be required to use the net proceeds to offer to purchase Notes at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the purchase date.
Certain Covenants
The Indenture contains covenants that limit the ability of the Company and the ability of its restricted subsidiaries to, among other things: (i) incur or guarantee additional debt or issue certain preferred stock or similar equity securities; (ii) incur certain liens, (iii) redeem, purchase or retire subordinated debt; (iv) make certain investments; (v) create restrictions on the payment of dividends or other amounts from the Company’s restricted subsidiaries that are not Guarantors; (vi) enter into certain transactions with affiliates; (vii) merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of the Company’s assets; (viii) sell certain assets, including capital stock of the Company’s subsidiaries; (ix) designate the Company’s subsidiaries as unrestricted subsidiaries; and (x) pay dividends, redeem or repurchase capital stock or make other restricted payments.
Events of Default
The Indenture provides for events of default which, if certain of them occur, would permit the trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Notes to declare the principal, premium, if any, interest and any other monetary obligations on all the then-outstanding Notes to be due and payable immediately.
Copies of the Indenture and the Notes are attached hereto as Exhibit 4.1 and Exhibit 4.2, respectively, and are incorporated herein by reference. The foregoing description of the Indenture and the Notes does not purport to be complete and is qualified in its entirety by reference to the complete text of the Indenture and the Notes.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
| Exhibit No. |
Description | |
| 4.1 | Indenture, dated as of April 28, 2021, among R.R. Donnelley & Sons Company, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee and as notes collateral agent. | |
| 4.2 | Form of 6.125% Senior Secured Notes due 2026 (included in Exhibit 4.1). | |
| 104 | Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document | |
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| R.R. DONNELLEY & SONS COMPANY | ||
| By: | /s/ Terry D. Peterson | |
| Terry D. Peterson | ||
| Executive Vice President and Chief Financial Officer | ||
Date: April 28, 2021