Vericast Corp.

Overview Key strengths Key risks Established brand name and customer relationships in the shared mail and check printing industries Elevated leverage resulting in an unsustainable capital structure Competitive pressures and secular volume declines in print-based advertising Significant exposure to cyclical print advertising demand Despite its 2021 refinancing to extend debt maturities and its sufficient liquidity for the next 12 months, we believe the company?s capital structure is ultimately unsustainable. Vericast's new debt burden bears annual interest expense of roughly $300 million and run-rate mandatory debt amortization payments of about $75 million, which we view as heavy debt fixed charges relative to the company's profitability. In our opinion, these debt-servicing costs will result in thin cash flows over the next several

...We believe Vericast Corp.'s (###+/Negative/--) capital structure is unsustainable long term. Despite its 2021 refinancing to extend debt maturities and its sufficient liquidity for the next 12 months, we believe the company's capital structure is ultimately unsustainable. Vericast's new debt burden bears annual interest expense of roughly $300 million and run-rate mandatory debt amortization payments of about $75 million, which we view as heavy debt fixed charges relative to the company's profitability. In our opinion, these debt-servicing costs will result in thin cash flows over the next several years, leaving the company reliant on cash balances and its asset-based lending (ABL) facility availability to support liquidity needs. Moreover, given the challenging outlook for print-based media, Vericast's already very high interest rates, and our expectations for leverage to remain elevated above the 6x area, we believe future refinancing efforts could be at risk of sub-par debt exchanges...

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