Readers Digest plans to file for bankruptcy

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Readers Digest plans to file for bankruptcy

Despite their rottweiler like attitude to getting new members, Readers Digest is about to go belly up and file for bankruptcy. This might not be a surprise to anyone who used to read the Digest however. Historically it had very good and well researched articles. In recent years however it became more lightweight and the content quality degraded.

The bankruptcy would take the form of a so-called pre-arranged filing, Reader's Digest said in a statement. A pre-arranged filing comes after a company has already reached deals with its lenders to cut its debt.

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.

"Restructuring our debt will enable us to have the financial flexibility to move ahead with our growth and transformational initiatives," said President and Chief Executive Officer Mary Berner, in a statement.

Reader's Digest calls itself the world's largest paid-circulation magazine in the world.

The Pleasantville, N.Y., media company said the bankruptcy would help facilitate an agreement with lenders to exchange a portion of its $1.6 billion in senior secured debt for equity, and transfer company ownership to the lender group.

The agreement, which is subject to court approval, also includes a commitment from some members of the senior lender group to provide $150 million in debtor-in-possession financing, which would help fund operations during the reorganization. The pre-arranged plan proposes to cut debt by 75 percent to $550 million, from the current $2.2 billion.

The company has offices in 44 countries, marketing books, magazines, educational products, recorded music collections and home video products. It also publishes food magazine Every Day with Rachael Ray.
By netchicken: posted on 18-8-2009

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