Source: Canadian Press

MONTREAL — Troubled commercial printer Quebecor World Inc. (TSX:IQW) says Pierre Karl Peladeau, Erik Peladeau, Jean Neveu and Jean La Couture have resigned from the Montreal-based company's board.

The moves, announced Wednesday, come as former parent Quebecor Inc., headed by the Peladeaus, sues Quebecor World, which is restructuring under bankruptcy protection.

Pierre Karl Peladeau took personal control of Sun Media Corp. and the Canoe online operation in November after the newspaper sector reported disappointing third-quarter results.

The resignations are the latest chapter in an acrimonious saga that has been playing out between the parent company and its troubled subsidiary.

The Peladeaus, Neveu and La Couture also sit on the boards of Quebecor Inc. (TSX:QBR.B) and its main operating company Quebecor Media Inc., a publisher, cable TV and broadcasting company.

Quebecor World said in a statement that Alain Rheaume, the printer's lead director, has been appointed as the new chairman of the audit committee and has been added as a member of the restructuring committee.

Meanwhile, Andre Caille has also been appointed as a member of the audit committee.

"Quebecor World does not believe the above-mentioned resignations will impact its plan to exit creditor protection as a strong company in its industry," the company said in a statement.

Quebecor World said it has been "determined that, as a result of the claims that have been filed by Quebecor Inc. and its subsidiaries as part of Quebecor World's court-protected restructuring process, their resignations are advisable."

The dispute dates back to the start of 2005 when Quebecor World and Quebecor Media were both part of the Quebecor Inc. holding company.

A verbal agreement between the two entities allowed the printing giant to use 90 per cent of the excess capacity of a US$51-million press built by Quebecor media in Mirabel, Que., to print Le Journal de Montreal, Ottawa Sun and several weeklies.

Quebecor World would pay $29 million for the first three years of the deal, according to a draft letter of agreement from September 2007.

But Quebecor World never signed the agreement and in January 2008 Quebecor Inc. severed all ties with its former subsidiary after the printing company sought creditor and bankruptcy protection in Canada and the United States.

Quebecor Media argued in court that the verbal agreement was valid because the two companies agreed in October 2007 that Quebecor World would print the Yellow Book for a U.S. company at the Mirabel plant. The contract was terminated a year later.

In its claim, Quebecor Media said Quebecor World's purchase of a new multimillion-dollar press would prevent it from "maximizing the revenues" at the Mirabel printing plant.

In a ruling Nov. 21, Justice Robert Mongeon sided with Quebecor World.

A U.S. bankruptcy court also approved the purchase of two other presses destined for American plants. The three presses cost US$50 million.

Mongeon said Quebecor World's decision not to sign the agreement effectively terminated the verbal deal between the companies. And even if it was valid, nothing prevented Quebecor World from purchasing its own presses.

The case marks just one of several efforts by the companies to sever their relationship. Quebecor World recently moved its head office out of the Quebecor building.

In January, the parent company told Quebecor World to find another name for its business to eliminate confusion.

Quebecor World employs 23,000 people and operates printing plants in the United States, Canada, Argentina, Brazil, Chile, Colombia, Mexico, and Peru.

© Canadian Press