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Reader`s Digest files for bankruptcy protection

Last Updated: Monday, August 24, 2009 - 20:32

New York: The publisher of the world`s
largest-circulated magazine Reader`s Digest, sold across
dozens of countries including India, on Monday filed for
bankruptcy protection in the US.

Reader`s Digest Association (RDA) in a statement said
that "it has filed voluntary pre-arranged petitions under
Chapter 11 of the United State Bankruptcy Code, as part of the
company`s previously announced restructuring plan."

The filing for bankruptcy protection by RDA is aimed at
reducing its debt burden by 75 percent and to strengthen
future financial position.

"The filing applies only to the RDA`s US businesses-- its
operations in Canada, Latin America, Europe, Africa, Asia and
Australia-New Zealand will not be part of the filing," RDA
said.

RDA, a global multi-brand media and marketing company
based in the US, has offices in 44 countries and sells books,
magazines, music, video and educational products reaching a
customer base of 130 million in 78 countries.

It publishes 94 magazines, including 50 editions of
Reader`s Digest, the world`s largest-circulated magazine and
sells approximately 40 million books, music and video products
across the world each year.

Prior to the filing, more than 80 percent of the
company`s senior secured lenders had signed on to the
agreement in principle.

Last week, RDA said it had reached an agreement in
principle with majority of its senior secured lenders on the
terms of a restructuring plan to significantly reduce its debt
burden and strengthen the company financially for the future.

As per the agreement, RDA`s senior lenders would exchange
a substantial portion of the company`s USD 1.6 billion in
senior secured debt for equity, effectively transferring
ownership to the lender group.

The agreement also establishes the substantive terms of
the USD 550 million in debt that would remain the company`s
balance sheet upon exit.

The company said it "has filed a number of motions to
ensure that the filing does not adversely affect day-to-day
operations for its employees, customers or suppliers."

"We look forward to emerging with a restructured balance
sheet and as a financially stronger organisation that is
positioned to pursue our growth and transformational
initiatives," RDA`s President and Chief Executive Officer Mary
Berner said.

Bureau Report

First Published: Monday, August 24, 2009 - 20:32
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