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Exhibit 99.1
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Contact: Sitrick and Company
Anita-Marie Hill
Brenda Adrian
(310) 788-2850
FOR IMMEDIATE RELEASE
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MASTER GRAPHICS TO COMPLETE DEBT RESTRUCTURING
THROUGH CHAPTER 11 REORGANIZATION
Expects to Reach $130 Million Bond Debt-to-Equity
Arrangement in July 2000
Orders for Customers, Employees, Vendors, Use of Cash, Cash Management
and Other Relief to be Presented at First Day Hearings
Memphis, Tennessee-July 7, 2000- Master Graphics, Inc. (OTCBB: MAGR) today
announced that the Company and its wholly-owned subsidiary, Premier Graphics,
Inc., have filed voluntary petitions to reorganize under Chapter 11 of the
Bankruptcy Code with the U.S. Bankruptcy Court in Wilmington, Delaware in order
to complete a debt restructuring of the Company. The Company said that it
expects to complete discussions within the month with the majority holders of
the Company's 11 1/2 % Senior Notes due 2005 in the principal amount of $130
million to convert substantially all of the bond debt into substantially all of
the future equity of the Company.
In connection with such debt to equity conversion, the Company also intends
to develop and implement a program of stock grants and other employee incentives
to compensate continuing management and key employees going-forward.
Concurrently,the Company said that it expects to finalize an agreement with its
prepetition lenders, led by General Electric Capital Corporation to provide
liquidity for purchases of inventory and raw materials, to continue servicing
customers in the ordinary course of business and for other general corporate
purposes, pending completion of debtor-in-possession financing discussions. The
Company is engaged in discussions to provide debtor-in-possession financing to
fund on-going operating needs through the completion of its restructuring.
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Michael Bemis, chief executive officer and chairman of the board of
directors of Master Graphics, said "Our customers should expect to receive the
same high quality products and service for which each of our divisions have
become known. The Company's employees will continue to be paid without
interruption including any accrued wages and expense reimbursements. Although
federal law prohibits the payment of prefiling debt without a court order, the
Company will pay vendors for goods and services received after the filing in the
ordinary course of business. We appreciate the continuing support that our
vendors have demonstrated and now they have the comfort of knowing the law gives
a super-priority status to bills for goods and services received after the
filing.
Mr. Bemis said that the filing was necessitated by the Company's heavy debt
burden and operational inefficiencies attributable to the lack of integration of
the business units acquired since 1997. Master Graphics has approximately $205
million in debt, most of which was accumulated to finance the acquisition of the
Company's 18 operating units.
Mr. Bemis, who was appointed chairman of the board on February 7, 2000 and
chief executive officer on June 9, 2000, said that the Chapter 11 process
provided the best means to maximize valuation of the Company for its various
stakeholders.
The Company said that it expects the Delaware bankruptcy court to consider
first day orders seeking appropriate relief regarding employees, customers,
vendors, use of cash, cash management and other customary initial matters at a
first day hearing scheduled for July 10, 2000 in Wilmington.
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Master Graphics provides high-quality, general commercial printing products
to numerous customers throughout the United States. The Cordova, Tennessee-based
company employs approximately 1,900 employees and operates 23 facilities in 14
states.
This press release contains statements which constitute "forward-looking
statements" within the meaning of the Securities Act of 1933 and the Securities
Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act
of 1995. While the Company believes that its expectations are based on
reasonable assumptions within the bounds of its knowledge of its business and
operations, prospective investors are cautioned that any such forward-looking
statements are not guarantees of future performance, and involve risks and
uncertainties, and that actual results may differ materially from those
contemplated by such forward-looking statements. The Company's ability to
restructure its balance sheet and successfully conclude negotiations with its
current lending group, proposed lending group, and the holders of its Senior
Notes is subject to a number of factors that are beyond the Company's control,
including the willingness of such parties to accept terms that are agreeable to
the Company. There can be no assurance that the Company will be successful in
its attempts to develop or implement restructuring alternatives or to reorganize
under Chapter 11 of the Bankruptcy Code. Important factors currently known to
management that could cause actual results to differ materially from those
contemplated by the forward-looking statements in this press release include,
but are not limited to, further adverse developments with respect to the
Company's liquidity position or operations of the Company's various business
divisions, adverse developments in the Company's efforts to renegotiate its
funding and adverse developments in the bank financing or public or private
markets for debt or equity securities, or adverse developments in the
development, im plementation, timing or results of the Company's strategic
business plan, the ability of the Company to realize the anticipated general and
administrative expense savings and overhead reductions presently contemplated,
the ability of the Company to return the Company's operations to profitability,
the level and nature of any restructuring and other one-time charges, and the
difficulty in estimating the feasibility of and/or costs relating to
consolidating operations. For further information on factors which could impact
the company and the statements contained herein, reference is made to the
filings of Master Graphics, Inc., with the Securities and Exchange Commission.
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