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Wednesday, July 24, 2024

Reader’s Digest Bankruptcy To Transfer Ownership

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Reader’s Digest will enter into Chapter 11 protection under the U.S. Bankruptcy Code. Under the terms of the reorganization, the company will exchange ownership of the company with its debt holders for a $1.6 billion reduction of its $2.2 billion in debt.

According to published reports, the company’s largest debt holders include J.P. Morgan Chase, GE Capital, Aries Management, DK Partners, Regiment Capital and Merrill Lynch.

When the company emerges from bankruptcy protection, it will still carry roughly $550 million in debt on its books. It will also have $150 million in new money debtor-in-possession financing.

According to a company statement “the vast majority of its suppliers and vendors will recover in full under a Chapter 11 plan.”

The Chapter 11 filing will apply only to the company’s U.S. businesses — its operations in Canada, Latin America, Europe, Africa, Asia and Australia-New Zealand will not be affected, according to the company.

Reader’s Digest’s U.S. operations include the company’s Community magazine (including the flagship, the large print edition and Selecciones), trade book publishing, reading series, RD Music, as well as a variety of home and garden, food and entertaining and health and wellness publications and books.

In March 2007, Ripplewood Holdings led a consortium of investors, including C.V. Starr & Co., Inc., Golden Tree Asset Management and the J. Rothschild Group in a transaction that resulted in the company being taken private. All of the members of the company’s board of directors who have served since the March 2007 acquisition, with the exception of Berner, have resigned from the company’s Board. The two recently appointed directors also continue to serve on the Board.

© 2009 Penton Media. Displayed by permission. All rights reserved.

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