Internet Burns One More Paper-Based Business: Envelope Maker

(Bloomberg) -- After 99 years of making envelopes that carried America’s junk mail, Cenveo Inc. filed for bankruptcy, blaming a shift by marketers from your mailbox to the internet.

Just as online advertising began growing, Cenveo started spending on traditional print media, boosting debt it now says it can’t afford to pay.

The company said it plans to restructure its balance sheet while under court protection. Cenveo has a deal with a group of first-lien creditors and has been trying to convince its biggest second-lien noteholder, Brigade Capital Management LP, to sign on as well. Brigade holds more than 66 percent of Cenveo’s second-lien and 16.1 percent of its first-lien notes.

The company listed more than $1.4 billion in debts and about $790 million in assets in its Chapter 11 bankruptcy petition filed in White Plains, New York. Stamford, Connecticut-based Cenveo is seeking court permission to borrow $190 million through an asset-backed loan and $100 million through a term loan.

“There’s a financial fix here, but how do you stem a sector decline?” asked Bill Popper, director of research at New York-based broker-dealer firm Clearview Trading Advisors. “The problem is the world is passing them by.”

Beginning around 2006, the company bet big on postal or "snail" mail, buying 16 envelope manufacturers, printers or label makers, including the $430 million purchase of Cadmus Communications Inc., the world’s biggest printing company serving scientific, technical and medical journals.

Envelopes make up 47 percent of Cenveo’s sales, with the rest of its revenue coming from its printing and label-making businesses. The company employs about 5,200 people.

Shares have fallen to around 50 cents in New York trading, from a 2017 high of $7.59.

The case is In re: Cenveo Inc. et al, 18-22178, U.S. Bankruptcy Court Southern District of New York, White Plains

(An earlier version of this article corrected the location of the court in final paragraph.)

To contact the reporters on this story: Steven Church in Wilmington, Delaware at schurch3@bloomberg.net, Eliza Ronalds-Hannon in New York at eronaldshann@bloomberg.net.

To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, Kenneth Pringle, Rick Green

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