Quebecor World's troubles continue; refinancing plan withdrawn

What if you want to sell, but nobody wants to buy? This situation has apparently happened again to Quebecor World, the giant printing arm of Quebecor Inc. which is also Quebec's largest publisher of consumer magazines.

According to a report by The Canadian Press, Quebecor World has withdrawn an ambitious refinancing plan (see earlier post) that it announced only a week ago, in which it had planned to sell about $250 million of shares and about $500 million in restructured or new corporate debt. But it apparently found insufficient demand. (A similar thing happened last August.) The result may be that the company will have to look at other ways to raise money, including selling assets.

The company has enough money until July, when its bank facility reduces by $250 million to $500 million, said Jamie Wetmore, senior financial analyst with DBRS, a leading ratings agency.

"They don't have a lot of head room but they are probably OK in the immediate term."

The ratings agency said the company's liquidity issues could intensify if it fails to refinance all or portions of its credit facilities by the first half of 2008. Its weak financial position could also lead to a reduced ability to execute on contract wins and improve its core business.

Concerns about the ability to refinance debt and weak quarterly results contributed to a large sell off of Quebecor World shares last week and this.

As of Wednesday morning, Quebecor World shares were selling for $2.29. A year ago, they were $17.25.