Vertis CEO: 'Turnaround is on track' with planned merger

Vertis Inc.'s planned merger with a Tennessee printing company will reduce its overhead and the Baltimore direct mail company's "turnaround is on track," Vertis CEO Mike DuBose said in a conference call Friday with analysts.

The company announced Thursday that it would forge ahead with its merger with American Color Graphics of Brentwood, Tenn., after calling off the merger last year. That merger attempt fell through because the companies couldn't gain enough support from bondholders.

Vertis has taken a hit in recent years as the direct mail industry faces competition from the Internet. The company has also been afflicted by the economic downturn, particularly in the mortgage and retail industries, DuBose said in the call.

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Under the terms of the merger agreement, Mike DuBose will become chairman and CEO of the combined company. Steve Dyott, CEO of American Color, will remain on board to facilitate the integration of the two companies. Once the merger closes, which is expected to occur in late summer, American Color will become a wholly-owned subsidiary of Vertis.

The plan would eliminate nearly $1 billion in debt from the two firms.

This time around, the companies say they have reached agreements with more than two-thirds of the current bondholders, who have agreed to exchange their bonds for about $550 million in new notes and substantially all of the new equity in the combined company. They hope to continue reaching agreements with additional bondholders over the next week or so.

The companies expect to launch a formal solicitation of consent for their prepackaged Chapter 11 plans of reorganization from holders of both Vertis Notes and ACG Notes within 20 days.

The two companies hope to have the process completed by the end of this summer.