Reader's Digest parent company files for bankruptcy again

NEW YORK Tue Feb 19, 2013 8:12am IST

Copies of the Reader's Digest magazines are seen in Port Washington, New York, August 18, 2009. REUTERS/Shannon Stapleton/Files

Copies of the Reader's Digest magazines are seen in Port Washington, New York, August 18, 2009.

Credit: Reuters/Shannon Stapleton/Files

Related Topics

Stocks

   

NEW YORK (Reuters) - The owner of magazine Reader's Digest, once the staple of doctors' offices and coffee tables, has filed for bankruptcy for the second time in less than four years, citing a greater-than-expected decline of the media industry.

RDA Holding Co and more than two dozen affiliates filed for a pre-negotiated Chapter 11 bankruptcy plan the company says will allow it to reduce its $534 million debt load by 80 percent, according to documents filed Sunday in U.S. Bankruptcy court in the Southern District of New York.

Its international operations are not part of the filing.

It is the second time the company filed for bankruptcy protection since 2009.

Despite emerging from bankruptcy as a smaller company in 2010, "its business plan and financial forecasts did not adequately account for the steep declines that the media industry has suffered over the last few years - as evidenced by Houghton Mifflin Harcourt Publishing Company's recent return to Chapter 11," Robert Guth, the company's president and chief executive officer, said in court documents.

Nor did the company's plan "adequately reflect the fragility of RDA's wide-reaching international footprint," Guth said.

Under the terms of the restructuring plan, $464.4 million of its senior notes will convert to equity, leaving the company with $100 million in debt.

Wells Fargo & Co (WFC.N) and holders of its senior secured notes have agreed to $105 million in debtor-in-possession financing to allow the company to continue operating under bankruptcy. The company plans to exit bankruptcy within four months, court documents say.

DeWitt Wallace and his wife Lila Acheson Wallace founded Reader's Digest in 1922. The magazine offered readers stripped-down versions of articles about health, home and family from other publications. It eventually began the best-selling consumer magazine in the United States. Today it operates print and digital magazines, books, music and videos worldwide and has more than $1.1 billion in assets, according to court documents.

Distressed-debt investor Alden Global Capital and hedge fund Point Lobos Capital LLC are listed as among the company's largest stakeholders, according to the filing. Luxor Capital Group, as administrative agent for a $10 million loan, is listed as one of its largest unsecured creditors. (Editing by Andrea Ricci)

FILED UNDER:

Reforms Push

REUTERS SHOWCASE

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

26/11 Plotter

26/11 Plotter

Pakistan to challenge bail for Mumbai attack "mastermind".  Full Article 

Chinese Economy

Chinese Economy

China revises up size of 2013 economy, sees no effect on 2014 growth.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage