DBRS Places Quebecor World Inc. Under Review with Negative Implications

DBRS has today placed the BB long-term debt ratings and Pfd-4 preferred share rating of Quebecor World Inc. and its related subsidiaries (Quebecor World or the Company) Under Review with Negative Implications. The Under Review – Negative status reflects DBRS’s concerns over the Company’s near-term liquidity, outcome of negotiations regarding the Company’s bank agreements (the existing waiver for which expires at the end of Q3 2007) and the Company’s strategic review of its European operations – all factors that have been exacerbated by continued weakness in the Company’s operating results. DBRS expects to complete its review after the end of Q3 2007.

DBRS is concerned with Quebecor World’s near-term liquidity, which continues to be negatively impacted by declining EBITDA and cash flow from operations, pressuring existing financial covenants and significantly restricting the Company’s financial flexibility.

Operationally, while DBRS acknowledges the Company is experiencing what should be near-term inefficiencies as a result of restructuring and other initiatives, DBRS notes continued structural declines in industry conditions will continue to make the Company’s recovery a challenge.

DBRS expects the Company’s EBITDA to continue to decline on a year-over-year basis in 2007, as a result of continued volume and pricing pressure. EBITDA margins are expected to continue to be pressured as cost savings and efficiency improvements arising from the Company’s retooling and restructuring are not expected to offset current industry trends in the near term. As such, DBRS expects EBITDA margins to remain in the low-9% range for the remainder of the year.

Quebecor World’s key financial ratios are expected to continue to experience pressure through the end of 2007. DBRS expects the Company’s debt-to-EBITDA and cash flow-to-debt to approach roughly 5.5x and 0.12x (DBRS adjusted), respectively, at the end of 2007.

DBRS notes the Company will have to be increasingly mindful of its existing financial covenants through the remainder of the year. Quebecor World may require additional waivers or amendments to its existing bank agreements in order to provide required financial flexibility.

DBRS expects to resolve the Under Review – Negative status once near-term liquidity constraints are assessed, in addition to comfort with regard to the Company’s bank negotiation process, as well as further clarity on the outcome of the Company’s strategic review of European operations. Following resolution of the Under Review – Negative status, DBRS expects Quebecor World’s long-term rating could fall into the B range, depending on the outcome of these various near-term challenges.