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Bondholders OK Phoenix request

November 20, 2005|By DANIEL J. SERNOVITZ

daniels@herald-mail.com

Phoenix Color Corp. bondholders recently approved a request by the company absolving it of its obligation to file quarterly reports with the federal Securities and Exchange Commission, a sign of confidence as the company seeks to pay down $105 million in debt, according to company information.

Phoenix, based at 540 Western Maryland Parkway in Hagerstown, issued the 10 3/8 percent senior subordinated notes in 1999. As part of the bond issuance, the company agreed to a request by the bondholders to file public reports on its finances.

On Oct. 25, Phoenix asked its bondholders for relief from having to file the public reports, which company Chief Financial Officer Edward Lieberman said had become cost-prohibitive under the increased restrictions of the Sarbanes-Oxley Act of 2002.

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"We were a voluntary filer with the SEC because the bondholders wished it to be that way," said Lieberman, who estimated the company's annual expense in preparing and filing the reports to be $1.5 million. "With the onerous cost of filing, it was prohibitively expensive and it gained the company nothing and it gained the bondholders nothing."

The votes were tabulated on Nov. 7, and Lieberman said about 95 percent of the bondholders approved the request. Lieberman said they will still be able to access information about the company's finances, including quarterly reports, but through a privately maintained Web site instead of on the SEC's public-access Web site.

"It doesn't really affect them," he said.

Lieberman said the company also is moving forward with a plan to move its two remaining book component operations into its former Book Technology Park Division plant on Phoenix Drive. The company sold the Book Technology Park Division to RR Donnelley & Sons Co. for $16.8 million last December.

The company is seeking to move its remaining book component plants, at 101 Tandy Drive and 540 Western Maryland Parkway, into the vacant Phoenix Drive facility. The company contracted with the Baltimore real estate firm Colliers Pinkard to market the Tandy Drive and Western Maryland Parkway sites. Lieberman said Phoenix hopes to move its operations into the Phoenix Drive site irrespective of whether or when it sells those two properties.

Lieberman said he expects the move to occur next year but he declined to give an exact timeline.

The company closed its Book Technology Park Division last spring, affecting about 180 workers, and it now employs fewer than 500 workers at its remaining book component plants.

Phoenix hopes to use proceeds from the sale of its Tandy Drive and Western Maryland Parkway plants to reduce its outstanding debt.

The company posted $85,177 in net income during the second quarter of 2005, up from a $2.8 million deficit for the period ended June 20, 2004.

For the first half of 2005, the company posted a $659,834 deficit, down from about $3.8 million in losses for the first six months of 2004.

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