The proposed credit amendment was made public in a filing earlier this week with the U.S. Securities and Exchange Commission, in which the company disclosed that it has hired advisors Lazard Freres & Co. LLC, Gibson, Dunn & Crutcher LLP and McKinsey & Company.
“The company will be working with its advisors to execute its transformation strategy and continue to optimize the business,” the Standard Register statement read.
Matthew Ingram, a finance and financial services lecturer at Wright State University, said Standard Register’s new advisors are at the top of their field.
“When you’re looking to shop a company around, or you need some restructuring of the balance sheet, these are the experts,” Ingram said, adding that the company is likely looking at ways to boost revenues to pay down debt, which could result in the sale of certain assets.
“They have to have a certain amount of cash flow to pay their liabilities or fixed charges coming in from their credit agreement,” Ingram said. “They’ve asked their creditors for more time so instead of having to comply on Dec. 31, 2014, which is the close of their (fourth) quarter, they can have two more months.”
The credit amendment could also be used as a tool to negotiate with lenders in the event of bankruptcy or liquidation, Ingram said, noting that creditors would be the first to receive proceeds from a sale or liquidation under terms of the amended agreement.
The company’s stock closed Friday at $3.19 a share, down a penny from the start of the day.
In July, Standard Register was notified that it was a risk of being de-listed by the New York Stock Exchange because it was not in compliance with the NYSE’s continued listing standards.
Standard Register was considered below the criteria because the company’s average market capitalization was less than $50 million over a 30-day trading period, and at the same time its stockholders’ equity was less than $50 million.
At the time, Standard Register President and Chief Executive Joseph P. Morgan Jr. attributed the market capitalization issue to the company’s acquisition of Dayton-based WorkflowOne in August 2013.
“We are realizing the benefits of the acquisition of WorkflowOne, including strengthening sales pipelines across our solutions portfolio, as we continue with the integration. We anticipate at least $40 million in annual savings when complete at the end of 2015, and look forward to sharing our progress and future plans for long-term value creation with the NYSE,” Morgan said in a statement.
Under NYSE procedures, Standard Register was required to submit a business plan to demonstrate its ability to achieve compliance.
In October, Standard Register announced the NYSE had accepted the company’s plan for continued listing.
Standard Register reported revenue of $219.4 million for the 2014 third quarter, a 10 percent increase compared to $199.4 million for the same period last year, company officials said. The company will release its fourth-quarter earnings in February.
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