The owner of the iconic magazine ‘Reader's Digest’, RDA Holdings has filed for Chapter 11 for the second time since 2009 owing to a slump in the media industry, in the US Bankruptcy court in New York.
RDA Holding and more than two dozen associates filed for the Chapter 11 protection on Sunday in an bid to convert its debt into equity, said the reports. The company hopes to convert about $465mn of its debt into equity held by creditors. RD declared that it held around $1.1bn in assets and $1.2bn in debt, said the reports. The international operations of the publication are however not part of the filing.
The publication emerged as a smaller company in 2010 after filing for a bankruptcy in 2009. Robert Guth, President and CEO said that the business plan and financial forecasts failed to appropriately take into account the slump in the media industry over the last few years, said the reports. In a major restructuring last time the company sizably reduced its footprint by selling some of its publications. RD holdings restructuring sale included the $4.3mn sale of Every Day With Rachael Ray and $180mn sale of Allrecipes.com and both to the Meredith Corporation.
After the restructuring plan now, in which $464.4mn of its debt would be converted to equity leaving the company with around $100mn in debt.
Wells Fargo and other holders of its debt have agreed for debtor-in-possession financing which means that the company would be able to continue operations while under bankruptcy. The company plans to exit bankruptcy within four months, said the reports.
Reader's Digest magazine was founded by Dewitt Wallace and his wife Lila Wallace in 1922. The publication shortly started the widely popular consumer magazine, ‘Reader’s Digest’ in the US. It currently operates print and digital magazines, books, music and videos worldwide.
Hedge fund Point Lobos Capital LLC and Alden Global Capital and are listed as among the company's biggest stakeholders, according to the court filing.