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| For Immediate Release November 23th, 2010 |
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UPDATE: NETWORK COMMUNICATIONS, INC. ANNOUNCES
INCREASED SUPPORT OF BALANCE SHEET RESTRUCTURING
Company to Cut Outstanding Indebtedness from Approximately $300 Million to $115 Million
(LAWRENCEVILLE, GA) -- November 23, 2010 Network Communications, Inc., along with its subsidiaries and affiliates (“NCI” or the “Company”), announced today that it has reached an agreement with 100% of its revolving loan lenders and 100% of its term loan lenders on the terms of its previously announced balance sheet restructuring that will significantly reduce the Company’s outstanding indebtedness, increase the Company’s liquidity and enable the Company to compete successfully in the competitive local media and marketing industries. The Company also has the support of approximately 89% of its bondholders and will continue to seek additional support for the Restructuring over the coming weeks.
“Obtaining the support of our creditors on the terms of our balance sheet restructuring is a huge step forward for the Company and all of our employees, customers and suppliers,” said Dan McCarthy, the Chief Executive Officer of NCI. “We look forward to implementing the restructuring over the course of the next several weeks and providing the Company with a de-leveraged balance sheet to provide us with the operating flexibility to take advantage of improving marketing conditions.”
Under the terms of the Restructuring, NCI will pay in full all of the Company’s customers, suppliers and vendors in the ordinary course of business. The Company does not anticipate any interruption in its business operations in connection with the Restructuring and will continue to operate and service its customers in the normal course of business.
The Restructuring—which will result in the reduction of the Company’s outstanding indebtedness from approximately $300 million to approximately $115 million and will significantly reduce the Company’s annual interest expense—will include: (a) the extension and amendment of the Company’s existing revolving loan and term loan facilities (the “Senior Credit Facilities”); (b) the cancellation of the Company’s outstanding 10¾% Senior Notes due 2013, in the aggregate principal amount of $175 million (the “Senior Notes”), in exchange for 100% of the new common stock of NCI (the “New Common Stock”) and new senior subordinated pay-in-kind notes in an aggregate principal amount of up to $45 million (the “New Notes,”); (c) the cancellation of the Company’s 12% senior subordinated notes, due 2013, in the aggregate principal amount of $25 million (accreted to approximately $49 million) (the “Subordinated Notes”) in exchange for a portion of the warrants to purchase 5% of the New Common Stock of NCI at an exercise price that implies a total enterprise value of $200 million (the “Warrants” and together with the New Common Stock and the New Notes the “New Securities”); and (d) the cancellation of the Company’s existing equity interests in exchange for a portion of the Warrants (collectively, the “Restructuring”).
Network Communications, Inc. is a leading local media company providing lead generation, advertising and Internet marketing services to the housing industry. The company's leading brands are Apartment Finder, The Real Estate Book, DigitalSherpa, Unique Homes, New England Home and Atlanta Homes & Lifestyles. NCI has market representation in more than 500 local markets around the United States. The company’s strategy focuses on providing high-quality and measurable marketing solutions to local clients by leveraging its proprietary prospect-focused distribution and content management infrastructure. NCI distributes more than 9.4 million local print catalogs of apartments for rent and homes for sale every month through more than 300,000 distribution points; NCI’s websites are leading Internet destinations for consumers looking for homes to rent or buy, with an average of 2.0 million unique users every month; and it provides Internet marketing services using social media tools to its customers.
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