Reader's Digest again files for bankruptcy

18 Feb 2013

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RDA Holding Co, the publisher of the venerable monthly household journal, the Reader's Digest magazine, yesterday filed for Chapter 11, the second time in fours yerars of as the  91-year old magazine is seeking bankruptcy protection from creditors.

In documents filed with the US Bankruptcy Court in New York, RDA listed assets and debt of more than $1 billion. Among the company's largest unsecured creditors were Luxor Capital Group with a $10 million loan, and the US Federal Trade Commission, with $8 million.

In order to reduce debt by $465 million, the New York-based company said that it has reached a pre-petition accord with its secured lenders and more than 70 per cent of its secured note holders to implement the pre-arranged restructuring.

''The Chapter 11 process, which will facilitate a significant debt reduction, will enable us to continue to redefine our business by focusing our resources on our strong North American publishing brands, which have shown a new vitality as a result of our transformation efforts, particularly in the digital arena,'' said Roberet Guth, CEO of Readers Digest in a statement.

Under the pre-arranged deal, secured lenders have agreed to convert around $465 million of debt to equity and secured commitments for $105 million in debtor-in-possession financing for day-to-day operations.

RDA expects to emerge from bankruptcy in less than six months with a debt of around $100 million - almost an 80 per cent reduction from current levels.

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