Chatham Asset Management Updates Stockholders On Discussions With R.R. Donnelley Regarding Its Credible Offer To Acquire The Company

Rhea-AI Summary

Chatham Asset Management, which owns 14.9% of RRD's common stock and is the largest bondholder, has proposed an acquisition of R.R. Donnelley & Sons Company (RRD) at $7.50 per share. This offer represents a 52.1% premium over RRD's closing price of $4.93 on October 11, 2021. While Chatham has sought to negotiate a non-disclosure agreement to advance discussions, RRD's Board has delayed, raising concerns about transparency and shareholder interests. Chatham has increased its debt position in RRD to $654.4 million and plans to finance the acquisition with cash and external funding.

Positive

• Acquisition offer represents a 52.1% premium over the current market price.
• Chatham intends to finance the transaction with cash and external financing, ensuring funding availability.
• Transaction would reduce RRD's total debt from 3.9x to 2.8x, equating to a 28% reduction in total debt.

Negative

• RRD's Board has delayed negotiations, raising concerns about its commitment to shareholders.
• The Board's use of a poison pill strategy may hinder shareholder value.

CHATHAM, N.J., Nov. 2, 2021 /PRNewswire/ -- Chatham Asset Management, LLC ("Chatham"), a private investment firm which manages funds that beneficially own approximately 14.9% of the outstanding common stock  of R.R. Donnelley & Sons Company ("RRD" or the "Company") (NYSE: RRD) and which is the largest bondholder of the Company, today issued the following statement to RRD's stockholders regarding the discussions with the Company concerning Chatham's recent proposal to acquire RRD at a price of $7.50 per share:

"For nearly the past two weeks, Chatham has devoted significant time and resources seeking to negotiate a non-disclosure agreement with RRD, which RRD requested, in order to commence discussions and due diligence regarding its all-cash offer to acquire RRD at $7.50 per share.  Despite Chatham making significant concessions to resolve all material open points in the non-disclosure agreement, the Company opted to delay discussions when it became clear it was time to execute the agreement.  We had expressed a strong desire to announce the signing of the non-disclosure agreement before RRD's earnings call, so that stockholders would have the comfort of knowing that the Company was going to meaningfully evaluate our offer, regardless of the Company's performance.

However, as has been a consistent problem for RRD over the many years that we have been investors, the Board once again failed to act with any sense of urgency or regard for transparency. That the Board would needlessly delay negotiations, on top of its commitment to a poison pill which is adverse to stockholder interests, further demonstrates to us that the Board may be more focused on its own entrenchment and enrichment at the expense of RRD's stockholders. We call upon the Company to immediately execute a customary non-disclosure agreement with us, so that we can begin discussions and due diligence to negotiate a successful transaction that provides stockholders full and certain value for their shares.  If the Company continues to delay or will not commit to undertaking a legitimate sales process, we reserve all rights to take further action as stockholders to hold the Board accountable."

On October 12, 2021, Chatham submitted an offer to acquire all the common stock of RRD not already owned by Chatham for $7.50 per share in cash. The proposed transaction represented a 52.1% premium over the closing price of $4.93 per share on October 11, 2021, a 6.2% premium over the 52-week high of $7.06 per share, and a 92% premium over the 365-day volume-weighted average price of $3.91 per share. Chatham intends to finance the transaction using cash on hand and external financing, and has secured a highly confident letter from Jefferies Group LLC supporting its ability to raise all necessary funds.

As a further demonstration of its commitment to ensure a successful financing, since submitting its prior offer on October 12, 2021, Chatham has increased its ownership of the Company's outstanding debt by approximately $78.8 million, to an aggregate of approximately $654.4 million, all of which it plans to equitize and/or subordinate in connection with its proposal. Given Chatham's current debt position, the transaction as contemplated would result in over a full turn of deleveraging, from 3.9x to 2.8x, equaling total debt reduction of 28%, versus 23% at the time of the last letter, and annual interest savings of 38%, versus 33% at the time of the last letter.

View original content:https://www.prnewswire.com/news-releases/chatham-asset-management-updates-stockholders-on-discussions-with-rr-donnelley-regarding-its-credible-offer-to-acquire-the-company-301414536.html

SOURCE Chatham Asset Management, LLC

FAQ

What is Chatham Asset Management's offer for RRD?

Chatham has proposed to acquire RRD at $7.50 per share, a 52.1% premium over its closing price on October 11, 2021.

How has RRD's Board responded to Chatham's acquisition proposal?

RRD's Board has delayed discussions on the proposal, raising concerns about transparency and shareholder interests.

What financial implications does the acquisition have for RRD?

The acquisition would reduce RRD's total debt from 3.9x to 2.8x, leading to a 28% reduction in total debt and significant interest savings.

What percentage of RRD does Chatham currently own?

Chatham owns approximately 14.9% of the outstanding common stock of RRD.

What is the significance of Chatham increasing its ownership of RRD's debt?

Chatham has increased its ownership of RRD's debt by $78.8 million, bringing its total to $654.4 million, which it plans to equitize/subordinate in connection with the acquisition proposal.