TORONTO (Reuters) - Commercial printer Quebecor World Inc IQW.TO faces a new problem as it restructures under protection from creditors, with high-profile customer The Economist wanting to end its contract.
The Economist, the well-known business magazine, said in a court filing that it “desires to terminate the printing agreement effective at the end of the initial term by providing Quebecor World (USA) with a written notice ... on or before March 31, 2008.”
The magazine argues it is being harmed by some of the automatic legal protection and standstills that Quebecor World has received from the courts as these prevent the magazine from exercising its right to end the printing deal.
“The Economist is not seeking to enforce a monetary claim against the debtors or their estates,” it states in its filing in reference to Quebecor World. “The Economist merely seeks to exercise its contractual right to terminate the printing agreement.”
The Economist does not say in the filing why it wants to end the contract, which began in 1999 and is to end in late September of this year unless extended.
“We’re not challenging this at all,” a Quebecor World spokesman said. “This is their right under the contract and that’s fine with us.”
However, he added that the printer is in talks with the magazine about keeping the agreement going “well past September 2008.”
In a statement issued jointly with Quebecor World, The Economist confirmed late on Wednesday that talks would continue.
“Quebecor World continues to be a trusted and valuable supplier of ours,” said Mark Suster, The Economist’s vice-president of finance and operations.
“They have been a large part of our success and growth in the U.S. market and we look forward to discussing how we can continue our relationship.”
Magazine-printing contracts such the ones with The Economist and other publishers are key for Quebecor World as it tries to maintain cash flow during its restructuring.
The company is controlled by Montreal-based publishing and media group Quebecor Inc QBRa.TOQBRb.TO.
Quebecor World shares fell 2.5 Canadian cents to close at 15.5 Canadian cents on the Toronto Stock Exchange on Wednesday.
Reporting by Wojtek Dabrowski; Editing by Peter Galloway