DBRS Downgrades Quebecor World Inc. to B (high), Trend Negative

DBRS has today downgraded the long-term debt ratings of Quebecor World Inc. (Quebecor World or the Company) to B (high) from BB, and downgraded the preferred share rating to Pfd-5 (high) from Pfd-4. The trend on all ratings is Negative. Commensurate with the ratings downgrade, the ratings have been removed from Under Review with Negative Implications.

DBRS had placed the ratings of Quebecor World Under Review with Negative Implications on August 14, 2007, as a result of concerns over the Company’s near-term liquidity, the uncertainty in terms of the outcome of negotiations regarding the Company’s bank agreements and the Company’s strategic review of its European printing operations. (Please see separate DBRS press release dated August 14, 2007.)

The downgrade reflects DBRS’s heightened concern over the Company’s near-term financial health which has been materially impacted by liquidity constraints and increased pressure on existing financial covenants.

Quebecor World’s liquidity continues to be adversely impacted by declining EBITDA and cash flow from operations, and could be further constrained should the Company violate debt covenants which could result in early debt redemption. Additionally, DBRS notes the Company’s near-term liquidity issues could be further impacted by restricted access to financing as a result of current capital market conditions.

DBRS expects the Company to proceed with its plans to obtain a waiver under its existing bank agreements to replace the existing waiver which expires upon the delivery of the Company’s Q3 2007 financial statements, which could provide the Company with additional short term financial flexibility.

While the Company’s retooling and restructuring process is largely complete, DBRS notes current industry conditions could make Quebecor World’s recovery difficult. DBRS expects continued volume and price erosion to contribute to declining revenue and additional EBITDA margin pressure through the remainder of the year. As such, DBRS expects the Company’s EBITDA to continue to deteriorate on a year-over-year basis in 2007.

Additionally, DBRS expects the Company to generate a free cash flow deficit in 2007 as a result of cash flow from operations pressure and above maintenance level capital expenditures relating to restructuring and retooling.

As a result, DBRS expects Quebecor World’s key credit metrics to experience additional pressure in 2007. Leverage is expected to increase at the end of the year, with debt-to-EBITDA expected to approach nearly 6.0 times and cash flow-to-debt expected to decline to the low 0.10 times range (DBRS adjusted) at the end of 2007.

The Negative trend reflects DBRS’s continued concern over the Company’s liquidity issues, its ability to improve operations in light of difficult industry conditions, in addition to concern over the Company’s ability to operate within its existing financial covenants. However, comfort with respect to the resolution of liquidity concerns in the near term, and stabilization and improvement of both the Company’s business and financial risk profiles over the longer term could lead to a Stable trend.

DBRS will continue to closely monitor developments at Quebecor World as they unfold. While DBRS notes Quebecor World is taking steps to address its immediate term challenges, further deterioration in the Company’s financial flexibility could result in additional downgrades.