David Kirkpatrick

August 17, 2009

Reader’s Digest files Chapter 11

Filed under: Business, Media — Tags: , , , , — David Kirkpatrick @ 3:09 pm

Even Reader’s Digest is driven to bankruptcy

From the link:

Reader’s Digest Association, the 87-year-old publishing company, said Monday that it plans to file for Chapter 11 bankruptcy protection to carry out a restructuring that would give lenders control of the company.

Reader’s Digest is seeking to reduce its debt load, which swelled after it was taken private in 2007 by an investor group led by Ripplewood Holdings. Reader’s Digest said in a statement Monday it had reached an agreement in principle with the majority of its senior lenders to convert a “substantial portion” of its $1.6 billion in senior secured debt into equity.

“Restructuring our debt will enable us to have the financial flexibility to move ahead with our growth and transformational initiatives,” Mary Berner, the company’s chief executive, said in a statement.

In addition to its flagship title, Reader’s Digest, the company publishes magazines such as Every Day With Rachael Ray and The Family Handyman and runs Web sites including Allrepices.com.

The company did not make a $27 million interest payment due Monday on its notes, and will use a 30-day grace period to continue talks with lenders about what it called a “pre-arranged” bankruptcy filing.

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