QUBECOR'S ROCKY FINANCIAL ROAD

[MattBrady]

While many Newsarama readers have been focused on say, issues of a more Spidery nature, a behind the scenes comics business story has been playing out that might have ramifications – the financial straits of Quebecor World, the Canadian-based printer responsible for printing the bulk of the comics that make up the American direct market, including those published by Marvel, DC and many other comic publishers.

For the last year, Quebecor’s financials have been under the strain of a $2.5 billion debt, changes due to the Canadian vs. American dollar (the rising Canadian dollar making American-based printing a viable option for some clients), and increasingly low cash reserves. Throughout last year, Quebecor declined to refinance its debt or settle upon a plan with a lender to avert what many saw as a looming cash crisis as debt payments were coming due.

Late last week, word came that Quebecor World is working on a (contested) $400 million (Canadian) cash bailout provided by its parent company Quebecor Inc, and a private equity fund managed by Brookfield Asset Management, but on Tuesday, the printer said that it had “failed to obtain $125 million of new financing required under waivers from its banking syndicate and missed a debt payment on $400 million of notes,” according to Reuters. Additionally, Quebecor World did not make a $19.5 million payment of interest due which was also due on Tuesday. While the failure to obtain the $125 million or failure to make the payment does not put Quebecor World into default on its debt, but the news was not taken well by the stock market, as The Financial Post reported that Quebecor World shares on the Toronto Stock Exchange fell by 62% yesterday to close at 18.5¢. Trading of QW shares were suspended on the New York Stock Exchange for a period earlier this month its per share price dipped below the NYSE’s $1.05 threshold. The TSX has placed Quebecor World under review and is giving the company 30 days to regain compliance or face delisting.

The Financial Post reports that the company has 30 days to “cure the non-payment” in regards to the missed $19.5 million payment, and quoted UBS analyst Eric Mencke as saying that “The bank is now in a position to force [the firm] to file for protection,” adding that the bands would wait until January 24th, the expiration of a 90 day grace period the banks granted Quebecor World last fall. The Post also quoted an unnamed source who claimed that the banks would not push Quebecor World into bankruptcy.

Standard & Poors has reduced the company’s credit rating to D for “default.”

As for what may come? From the Post: Late Wednesday, Quebecor World said its parent and Brookfield's Tricap Partners unit had extended the deadline on their rescue offer until 9 a.m. this coming Sunday and said the two "have indicated that they have made progress on the satisfaction of" conditions they required before making their investment. But the two "have requested additional time," the printer said. It gave no indication in the press release where it stood in talks with its bankers.
In addition, the banks face losses in case of a filing, as more than US$500-million of the printer's credit line is unsecured. Quebecor World has been at the brink of collapse since last month, when a complex refinancing fell apart, as well as a deal to sell its European assets.

What does this mean for comics? Not much. At least on the reader end. Are the appropriate parties from DC and Marvel aware of what’s going on at Quebecor? Sure. Are they worried, or looking to set books up at other printers? Probably not.

Despite the rough seas it’s currently navigating, Quebecor is a huge, multinational corporation, and while what’s going on in regards to its finances isn’t ideal, desirable or even normal, it’s not unprecedented or a direct route to the end of the business. At the end of the day, Quebecor World will refinance its debt and move on (albeit with a limp, most likely) or it will further weaken, and be bought out by a competitor who will work to keep its accounts. Now, if that happens, there is a question about pricing pressure due to reduced competition, but even that’s still a far way off if it ever comes to pass.

[Arvandor]

$2.5 billion?!

*cough*

[johnlayman]

But I thought Canada was a Utopia!!!

[adamcasey]

I thought something was afoot in that they weren't sponsoring SPX last year.

Here's hoping for the best.

[EdKaye]

That is very sad. People are so happy with the Canadian dollar being so high. But people fail to recognize what affect this has on businesses which operate on an international level. Since the population in Canada is not very high, most companies have to operate in the US, and and due to the high Canadian Dollar this is becoming a much less attractive prospect for US investors.

[nenad]

This has nothing to do with rising canadian dollar and a lot to do with mismanagement of the company. That 2.5 bil didn't come overnight, it was building there for a while.

[tof]

Is that the Canadian Dollar that is rising or the US Dollar that is declining?

The fact that the USD is so low compared to the Canadian Dollar certainly didn't help (european companies doing lot of business in the United States face the same problem) but QWI debt is not recent. Even if they didn't manage to sell their european operations last month I'm quite sure they will find a way to keep the canadian facilities running. I don't expect any change for comic book companies soon.

[holtom2000]

they should hire me. I'll turn that company around

[Not From Around]

Originally Posted by nenad

This has nothing to do with rising canadian dollar and a lot to do with mismanagement of the company. That 2.5 bil didn't come overnight, it was building there for a while.

No doubt, but how? Did they spend a fortune buying out and taking over competitors? Did they over invest in new equipment and plant capacity? Did the market for printing undergo a dramatic contraction we haven't heard about?

I wonder if any of Mark Alessi's detractors are going to blame him for Quebecor's collapse? CrossGen stiffed them on over a million dollars in printing bills, IIRC.

[atomika]

What they failed to mention in the article is Quebecor's suspect book keeping
and horrible customer relations and finished product.

I used Quebecor for the first 6 issues of Atomika based on word of mouth
from other publishers that Quebecor was the big printer in the business.

What I found was the most un-professional clip joint Canada had to offer.
Quebecor is by far the worst printer in the business.
(Stay Away!!

Don't blame the economy or weak dollar on this one,
Quebecor would try to collect invoices three times.
Their reps didn't know what a proof was ?
They will put your printing job on the end of the runs of other books
without re-calibrating the machines.

If you're not printing over 100k books you'll get less than professional treatment.

Sal Abbinanti

www.mercurycomics.com

[Nat Gertler]

Originally Posted by adamcasey

I thought something was afoot in that they weren't sponsoring SPX last year.

It should be noted that the division that handled smaller-publisher black-and-white stuff was sold off, and now exists as a separate company, Imprimerie Lebonfon.

[Mostly_Human]

Originally Posted by atomika

What they failed to mention in the article is Quebecor's suspect book keeping
and horrible customer relations and finished product.

I used Quebecor for the first 6 issues of Atomika based on word of mouth
from other publishers that Quebecor was the big printer in the business.

What I found was the most un-professional clip joint Canada had to offer.
Quebecor is by far the worst printer in the business.
(Stay Away!!

Don't blame the economy or weak dollar on this one,
Quebecor would try to collect invoices three times.
Their reps didn't know what a proof was ?
They will put your printing job on the end of the runs of other books
without re-calibrating the machines.

If you're not printing over 100k books you'll get less than professional treatment.

Sal Abbinanti

www.mercurycomics.com

You f**kin' tell 'em, Sal. I love your interviews on CGS. You, my friend, ROCK!!

Also, Canada is America's crazy "Cat in the Hat," club-hopping, raving hat. (We should have gotten rid of it YEARS ago.)

[seamonkey]

So the very obvious question is, if the printer of almost all the comics in North America tanks what happens to comics?

[adamcasey]

Originally Posted by seamonkey

So the very obvious question is, if the printer of almost all the comics in North America tanks what happens to comics?

IDW will continue trucking along, they get their stuff printed in Korea.

[Ivan_Mtl]

Originally Posted by aylwinatrix

Ask any Quebecer and they'll tell likely tell you they don't consider themselves a part of Canada.

Wanna know something else? The feeling is, more often than not, mutual...

That is absolutely ridiculous. I happen to live in Montreal, Quebec, and I can tell you that most Quebecers consider themselves Canadians first. In fact, when Quebecers went to the polls in two referendums and were asked whether they wanted to separate from Canada and live in an independant Quebec, a majority of them voted NO. In the case of the second referendum, all this despite an unclear question, ballot stuffing, and other shenanigans the separatist minority used to try and swing the vote in their favour. They failed.

Since I am "any Quebec" and I consider myself a Canadian first, your statement is clearly false.

As for Quebecor, I used them in the past two print three issues of my comic book, and I had no problems whatsoever. Of course, it was a low-print run, black n' white book, so it was printed at Lebanfon, but I was sent proofs before the book went to print, and the finished product and their shipping was excellent. Also, the communication I had with Patrick at Quebecor was very good, so no major gripes here.

[rochvail]

Originally Posted by aylwinatrix

Ask any Quebecer and they'll tell likely tell you they don't consider themselves a part of Canada.

Wanna know something else? The feeling is, more often than not, mutual...

Was that really necessary? While I agree lots of Québécois are seperatists, not all of them are. I'm originally from Québec and most of the people I grew up with did not feel that way.

This isn't a political forum. It's about comic books. We don't care about your opinion of Quebecers.

[thefourthman]

Originally Posted by adamcasey

IDW will continue trucking along, they get their stuff printed in Korea.

Marvel has been using a variety of printers recently... getting full cases of books reveals a lot about what is going on.

[Spinja]

Originally Posted by Mostly_Human

Also, Canada is America's crazy "Cat in the Hat," club-hopping, raving hat. (We should have gotten rid of it YEARS ago.)

Excuse me, Mr. Human -- may I call you Mostly? -- but the "hat" in question was not "yours" to get rid of.

[LordPickles]

Anyone have any good resources for printing now that they are going under? I had been in contact with them a couple of months ago and gotten quotes to print my book but now I guess they are not an option. Actually, from the sound of things, I'm glad I never got the chance to do business with them.

Can anyone point me in the direction of a fair and reliable printer?

[Stephen Day]

Originally Posted by aylwinatrix

Ask any Quebecer and they'll tell likely tell you they don't consider themselves a part of Canada.

Wanna know something else? The feeling is, more often than not, mutual...

I don't feel that way about Quebec. I have family and friends who live there.

Please do not speak for me.

[Arion]

Originally Posted by seamonkey

So the very obvious question is, if the printer of almost all the comics in North America tanks what happens to comics?

No price increases , please .

[dollman]

I wasn't even aware that Quebecor World was still even in the comic printing business. QW's parent company - Quebecor Inc., is a major media congolermate in Canada. Their biggest asset is the Sun Media chain of newspapers, and Q Inc. has been fishing to purchase a telecom company and/or major Canadian broadcaster.

The reality is that Q Inc. could bail out Q World at any time. Their preference however is to let Q World fend for itself. And as of today, it looks like Q World has gotten an extension to raise new financing:

http://www.financialpost.com/story.html?id=244398

My guess is this will have minimal disruption on comics being published. I suspect Marvel and DC all ready have alternative printers lined up.

[adamcasey]

Originally Posted by thefourthman

Marvel has been using a variety of printers recently... getting full cases of books reveals a lot about what is going on.

Yeah, seriously. How about Runaways #25 being a quarter inch shorter than a normal comic? Or the color variations on the covers.

[LabRatMan]

Originally Posted by LordPickles

Anyone have any good resources for printing now that they are going under? I had been in contact with them a couple of months ago and gotten quotes to print my book but now I guess they are not an option. Actually, from the sound of things, I'm glad I never got the chance to do business with them.

Can anyone point me in the direction of a fair and reliable printer?

I am thinking about these guys:

http://www.parkpress.com/

[bg.]

What makes me laugh is that if it weren't for the name of the company, we wouldn't even be talking about Quebec

Anyways, Quebecor runs 17 print shops in 5 different provinces. They own Videotron and canoe.ca. They're huge and far from being Quebec only. They print tons of magazines, including Time and Cosmopolitan.