Chatham Asset Management LLC, a private investment firm headquartered in Chatham, on May 16 submitted a letter of interest to acquire San Antonio-based Vericast from MacAndrews & Forbes Inc. for roughly $2.85 billion.

Chatham already owns about half of the outstanding indebtedness of the marketing company, explaining that the purchase price is the value of outstanding indebtedness.

In the interest letter to Vericast CEO John O’Malley, Chantham Managing Member Anthony Melchiorre detailed CAM’s longstanding investments in the company, including:

• Serving as the lead backstop investor in Vericast’s multibillion dollar refinancing transactions in 2020 and 2021.
• Owning a majority of the approximately $1.2 billion in outstanding principal amount of 11% first lien senior secured notes due 2026, and virtually all of the approximately $439 million in outstanding principal amount of 13% second lien senior secured notes due 2027.
• Currently investing in Vericast’s term loan facility due 2026.

“We are prepared to support any financing requirements for this transaction by subordinating some of our debt interests into subordinated notes or equity, thereby reducing the company’s net leverage by up to 2.0x,” Melchiorre wrote. “With this significant deleveraging and potential additional synergies to be realized with other Chatham portfolio companies, we would anticipate to refinance the capital structure at more favorable rates and lower the company’s cash interest payments by approximately $100 million to $150 million per year on a pro forma basis, thereby substantially enhancing the company’s financial flexibility.”

Chatham would conduct required due diligence and documentation and is “prepared to devote considerable resources to completing this transaction,” Melchiorre stated.

Vericast recently announced several growth initiatives, including investing in technology and hiring for more than 250 new positions across the organization—its largest investments in innovation and employees since the company’s 2020 launch.

In its year-end financial results released March 3, Vericast reported 2021 consolidated net revenues decreased 2% and total adjusted EBITDA increased 6.2% compared with 2020. The company did not immediately return NJBIZ’s request for comment about Chatham’s letter of interest.

Chatham is a credit investment firm with investments in the print media and marketing communications industries, including investments in R.R. Donnelley & Sons, McClatchy, Postmedia and Accelerate360.