LOVELAND - Even as Quebecor World Inc. continues to fight to stay afloat, the company's Loveland site appears to be faring well.

The beleaguered Canadian printer filed for creditor protection under Chapter 11 of the U.S. Bankruptcy Code on Jan. 21, concurrently requesting the same protections under Canadian law. Since filing, the company has been on a roller coaster - landing new contracts, losing established clients, closing some sites, placing its UK operations under administration. But for several weeks, the entrance to the Loveland operation has been adorned with a "NOW HIRING" banner.

The company currently employs about 225 and was the 10th largest employer in Loveland last year. Quebecor acquired US West's directory printing plant here in 1995. The acquisition gave the company a physical presence in the western United States market.

Quebecor spokesman Tony Ross did not respond to several requests for comment regarding the hiring situation in Loveland. The Quebecor Web site did not list any available positions for the site.

It wasn't long ago that the prospect of an increased Loveland presence for Quebecor had the attention of city officials. In August 2005, the city and the Colorado Economic Development Commission committed up to $414,000 in incentive funding for an expansion of the facility.



Dex, Yellow Book contracts

At the time, Quebecor executives said the company wanted to grow to accommodate new printing contracts for the Dex and Yellow Book telephone directories, scheduled to run through 2014. The project would have called for a 43,000-square-foot addition and some $40 million worth of new printing equipment. The incentive funding would become available if the company could add almost 140 jobs.

The company's decision to expand was put on hold when a corporate restructuring program began shortly after the city offered the incentives. The program, on schedule to be completed this year, has focused on consolidating operations into larger, more efficient facilities.

Quebecor recently announced it will close its 47-year-old Magog, Quebec, plant, which employed 300, as part of the restructuring.

The Magog facility is not the first casualty since the bankruptcy filing. According to media reports, Quebecor let go almost 90 of its 240 employees at the Memphis, Tenn. facility and appointed Ernst & Young as administrators to its subsidiary in the United Kingdom to consider options including a sale.

However, the company has maintained that the bankruptcy has not impacted operations.

"There is no impact on the Loveland facility," Ross said in an e-mail interview with the Business Report the day after Quebecor filed for bankruptcy. "Loveland and all our facilities are operating on a business-as-usual basis, we are servicing all our customers with a quality, on-time product."



Corporate challenges

Whether or not the facilities are operating as usual, the company as a whole is dealing with issues that are not the norm. In its bankruptcy filing, Quebecor details it current liquidity crisis. Pressure to reduce its indebtedness to its bank syndicate and demand for payment and future cash terms from suppliers proved too much for the company to overcome.

At the time of filing, the company was overdue on more than $100 million in trade payables and was receiving requests for payment from several hundred suppliers. The company's top creditors are financial firms; Royal Bank of Canada has the largest claim with $735 million owed.

"It's hard to pinpoint Quebecor World's difficulties to any one thing, but there are many challenges facing the magazine, book and catalog sectors," said Erik Cagle, senior editor of trade publication Printing Impressions. He indicated that page counts and ad pages haven't recovered to pre-9/11 levels for magazines and that mergers in the publishing industry has affected book printers.

"Electronic technologies did take away market share from most printers, but the more successful ones have adapted by diversifying into digital printing, mailing, fulfillment and any number of other ancillary services," he added.

Cagle pointed out that the company has struggled somewhat since its $2.7 billion acquisition of World Color in 1999. Also adding to Quebecor's plight is its turmoil in top leadership - the company has had six CEOs since 2003. The company is now facing defection of its largest shareholder.



Impact on shareholders

Quebecor Inc., which holds 85 percent of the voting shares at Quebecor World, is seeking to distance itself from its troubled subsidiary. Shortly after Quebecor World filed for creditor protection, Quebecor Inc. formally advised the company that it would have to remove "Quebecor" from its name. Additionally, Quebecor Inc. issued a statement to affirm that the firm and its other operating subsidiary, Quebecor Media, were not impacted by the developments at Quebecor World.

However, the tie between the two companies has had an impact. Quebecor World's stock has fallen from nearly $24 in spring 2005 to 10 cents today. In a research report, UBS Securities indicated that Quebecor Inc.'s stock fell 25 percent since November because of speculation that it would use capital from Quebecor Media to finance Quebecor World.

Ross said in his January e-mail that the decision regarding use of the Quebecor name will be left up to the judges presiding over the creditor protection.

"We do not know when this issue will be raised," he wrote. "In the meantime the company will continue with the name Quebecor World."