Reader's Digest parent company files for bankruptcy again
By Ilaina Jonas
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 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. Continued...