Vistaprint parent Cimpress takes $300 million investment from Apollo Global Management

GaryPageau , ,

Apollo Global Management Inc. is investing $300 million in Cimpress plc, the parent of Vistaprint and other commercial printing entities. The move is part of several actions Cimpress management is taking to counter the impact of the worldwide COVID-19 pandemic. In 2019, Apollo Global – which manages billions of dollars across multiple funds and sectors – purchased Shutterfly and Snapfish.

On April 28, Cimpress signed a purchase agreement to raise $300 million from funds managed by affiliates of Apollo Global Management via a private placement of securities. The investment, which will be made by funds in the Apollo hybrid value business, is structured as 5-year second lien notes with a 12% coupon, of which up to 50% can be paid-in-kind at Cimpress’ option, the company said in a press release. Cimpress intends to use the proceeds to pay down a portion of the term loan under its senior secured credit facility and to pay fees and expenses incurred in connection with the financing and the restructuring of some prior debt.

The company said the impact of COVID-19 impacted its many small-business customers, which lowered demand. Starting in March 2020, Cimpress said it significantly reduced costs and preserved cash by lowering advertising, ceasing temporary labor contracts, and furlouging or reducing work time for manufacturing and customer service team members, generating $140 million savings on an annualized basis in comparison to pre-pandemic expectations. Other cost-saving actions included a substantial reduction in travel and training and external service engagements, the temporary elimination of 401(k) match for U.S. employees , strict hiring limitations, the permanent elimination of certain roles, and other measures.

“We are amending our credit facility and raising capital and have reduced cost in order to create the financial flexibility to enable us to focus on execution, even if the pandemic’s negative effects on our revenues were to be substantially deeper and more prolonged than we currently anticipate,” says Sean Quinn, executive vice president and CFO.

For the rest of the year, the company said is projecting third-quarter results to decline 10% to $598 million. Consolidated revenue grew 2% year over year through February in reported currencies but declined 30% in the month of March, the company said. Demand worsened through the month of March, with consolidated bookings declining approximately 65% year over year in the last week of the month and the first week of April. In the week ended Saturday, April 25, the rate of year-over-year decline lessened to approximately 40% as customer and product focus has evolved in reaction to the current situation.

“Even though deep economic recessions are painful, they also create opportunities and accelerate competitive advantages for companies with strong business models that focus on execution, invest in key projects, and improve customer value,” says Robert Keane, chairman and CEO. “Our recent actions ensure that Cimpress remains financially robust during these uncertain times so that we can do exactly that.”