CHICAGO (Reuters) - Cenveo Inc CVO.O, one of the largest U.S. printing and envelope companies, filed for Chapter 11 bankruptcy protection on Friday, struggling under $1 billion of debt and an industry transformed by the internet.
Many of Cenveo’s products, such as specialized envelopes for credit card statements, have been replaced by electronic billing and advertising, Chief Restructuring Officer Ayman Zameli said in court papers.
To adapt to the changing landscape and recapitalize its balance sheet, Cenveo said it has reached an agreement with creditors that will cut debt by about $700 million through the bankruptcy, which does not include its foreign entities such as those in India.
Stamford, Connecticut-based Cenveo has also secured $290 million of debtor-in-possession financing to support its operations throughout the bankruptcy proceedings.
The company’s first-lien lenders will receive nearly all the equity in the reorganized company when it emerges from bankruptcy, along with new debt, in return for reducing what they are owed.
Cenveo plans to cancel its stock and holders of the company’s unsecured notes will receive around 2.5 percent of what they are owed.
Shares of Cenveo were down about 64 percent in midday trade on Nasdaq at 52 cents.
The company’s plan needs to be approved by creditors as well as the U.S. Bankruptcy Court in White Plains, New York.
The company acquired National Envelope out of bankruptcy in 2013, which was National Envelope’s second trip through Chapter 11 in three years.
In addition to producing 50 billion envelopes annually, Cenveo’s prints comic books and prescription labels for pharmacies and has more than 30 U.S. operating plants.
The company traces its roots to 1919 when it began as the first consumer envelope manufacturer in Denver, Colorado. It grew into one of the world’s largest print-focused businesses through a series of mergers and acquisitions.
Reporting by Tracy Rucinski; Editing by David Gregorio