Reader’s Digest says most lenders back restructuring plan
The Reader’s Digest Association Inc., the troubled Chappaqua-based magazine publisher that is expected to soon file for bankruptcy reorganization, said that most major creditors and investors are backing the company’s efforts to revamp the company’s finances.
Reader’s Digest said today that nearly 80 percent of its senior secured lenders and nearly 70 percent of its institutional investors have signed on to an agreement that calls for a restructuring plan that will reduce the company’s debts and improve its financial outlook.
Reader’s Digest, whose flagship magazine is the world’s largest with nearly 70 million readers in more than 60 countries, has been hurt by the global economic slowdown that has eroded advertising revenues and accelerated declining print subscriptions.
The privately held company reported a net loss of $462 million during its fiscal third quarter ending March 31, much worse than the net loss of $53.6 million a year earlier.
Under the restructuring plan announced this week, the debt on the company’s books would fall from $2.2 billion to $550 million. Reader’s Digest said it plans to file soon for Chapter 11 bankruptcy protection to complete the deal.
On Monday, the company missed a $27 million interest payment as it continued talks with lenders about the restructuring plan.