NEW YORK: Venerable US publisher Reader's Digest is to file for Chapter 11 bankruptcy protection as it seeks to reduce the debts incurred when it was bought out for $2.2bn (€1.55bn, £1.33bn) by investors headed by Ripplewood Holdings two years ago.
If successful, the "pre-pack" deal already agreed with its main creditors will result in annual interest payments falling from $145m (€103m, £88m) to $80m (€57m, £49m). Its debt will fall from $2.2bn to $550m (€390m, £334m).
Reader's Digest operations outside the US are not part of the bankruptcy process as the debt burden falls on the US parent. Reader's Digest recently found it was unable to pay a $27m (€19m, £16m) installment on its debt as it has seen advertising revenues decline sharply in 2008 and 2009.
The company, based in Pleasantville, New York State publishes a number of titles as well as the eponymous flagship which it claims is the biggest-selling magazine in the world. It is also a major player in mail order books, videos and music.
Chief executive Mary Berner says, "Our deal has already been negotiated and hammered out with a majority of our creditors. It doesn't mean we'll be selling off assets. It's business as usual."
Data sourced from BBC Online; additional content by WARC staff