| 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.
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