Reader`s Digest files for bankruptcy protection
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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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