'Reader's Digest' Files for Bankruptcy

Monday, 17 Aug 2009 02:31 PM

By Dave Eberhart

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink

The venerable and iconic “Reader’s Digest” magazine has announced that it will be undergoing a voluntary pre-packaged Chapter 11 filing in U.S. bankruptcy court, according to a report in Foliomag.com.

The Reader’s Digest Association (RDA) Monday disclosed that the plan that was negotiated with a majority of its senior secured lenders seeks to reduce the company’s debt from $2.2 billion to $550 million. Among RDA’s senior lenders are Bank of America, JP Morgan and GE Capital.

“Reader's Digest,” co-founded in 1922 by Lila Bell Wallace and DeWitt Wallace and based in Pleasantville, New York, will continue to be published.

The Audit Bureau of Circulation notes that the family-friendly magazine enjoys a circulation of over 8.1 million copies in the United States -- and a readership of 38 million.

Global editions of Reader's Digest reach an additional 40 million people in more than 70 countries, with 50 editions in 21 languages.

According to Monday’s announcement, RDA’s senior lenders will exchange a “substantial portion” of the company’s $1.6 billion in senior secured debt for equity. The plan also provides for a transfer of ownership of the company to the lender group.

According to the agreement, RDA's lender group will provide the company with $150 million in debtor financing, which will be convertible into exit financing upon emergence from Chapter 11.

"This agreement in principle with our lenders follows months of intensive strategic review of our balance sheet issues to financially strengthen the company," RDA CEO Mary Berner said. "Restructuring our debt will enable us to have the financial flexibility to move ahead with our growth and transformational initiatives."

Foliomag.com further reported that the reorganization will impact only RDA’s U.S. businesses. “These actions will better position us for future success,” the spokesperson said. “We will continue to operate normally through the process.”

The magazine, a publicly traded corporation since 1990, has reportedly lost money every year since 2005.

By 2009, the scrambling book-size magazine was planning to decrease its circulation to 5.5 million and to publish 10 times a year rather than 12.

RDA also has decided not to make a $27 million interest payment due on its senior subordinated notes, which are due in 2017. RDA instead will take advantage of a 30-day grace period to continue discussions with its lender group.

© 2014 Newsmax. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Mali's Islamists Withdraw Cease-Fire Pledge

Friday, 04 Jan 2013 13:06 PM

Tens of thousands of Fatah supporters rallied in the Hamas stronghold of Gaza on Friday for the first time since they we . . .

Fmr. CIA Director Hayden: Iran Nuclear Crisis Gets 'Scarier'

Tuesday, 17 Jul 2012 18:11 PM

 . . .

Join Fmr. CIA Director for Special Iran Briefing, Assess the Danger

Friday, 13 Jul 2012 12:27 PM

 . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved