It looks like literature icon Reader’s Digest is filing for bankruptcy. Publisher, Reader’s Digest Association Inc, the publisher of the small magazine, is set to file Chapter 11 bankruptcy as part of an agreement reached with the majority of its secured lenders to cut down the debt by 75%.
In a statement, the publisher said that their senior secured lenders plant to exchange a large part of the $1.6 billion debt for equity stakes in the company.
Several are offering Reader’s Digest a $150 million bankruptcy loan and debtor-in-possession financing, so the company have sufficient liquidity throughout the reorganization process.
Reader’s Digest was purchased by a group of investors back in March 2007. The investor group led by Ripplewood Holding LLC left the company riddled with debt just prior to slump in the advertising market.
As a result, the ad sales for Reader’s Digest dropped 7.2% to $121.2 million in the first half of 2009 from higher numbers in 2008.
Reader’s Digest, based in Pleasantville, New York, was quick to point out that the specialized bankruptcy package was not application for foreign operations.
The agreement with principal lenders will reduce the amount of outstanding debt by $550 million from a total of $2.2 billion.
Digest CEO Mary Berner said the following in a recent interview: “Because this is a pre-arranged deal, it’ll be business as usual.”
She went on to say, “There’s no anticipated layoffs, no anticipated business closings, no anticipated effect on our employees, our freelancers, our vendors or our business partners.”
According to Berner, Reader’s Digest may emerge from bankruptcy within 45 days to 90 days.
In addition, the company plans to use a 30-day grace period to delay a $27 million interest payment due today on its 9% notes maturing in 2017 so they can finalize the terms for the debt restructure.
Similar Posts:
- Kodak May Benefit From Debt Refinancing Bid
- Maphre : strong results for 2011
- Casino Planning Debt Swap
- Blockbuster Comes Back Stronger With New Debt Offering
- Commercial Support At Its Best ? Low Rate Business Loan
Tags: Bankruptcy, Reader’s Digest
Recent Comments