San Francisco: Reader's Digest, once a favourite monthly magazine found in doctors' offices and on coffee tables in millions of homes in the US and around the world, filed for bankruptcy Monday as part of a restructuring deal announced last week.
HCL Tech sees no impact from Reader's Digest bankruptcy
The deal will see lenders swap $1.6 billion in debt for a 92.5-per cent stake in the restructured firm with the remaining shares reserved for the board and senior management. The deal cuts the company's debt from $2.2 billion to $550 million and does not include any of the company's foreign subsidiaries, many of which remain profitable.
The magazine is the latest of several debt-laden media companies in the US to succumb to the recession, which is also weighing on most major newspapers. The big media casualties this year include the Chicago Sun-Times, which filed for bankruptcy in March, and Denver's Rocky Mountain News, which shut down in February.
Chapter 11 plan cedes Reader's Digest to lenders
Reader's Digest was acquired in a leveraged buyout in 2007 by the private equity firm of Ripplewood Holdings for $1.6 billion. Ripplewood Holdings' investment is now wiped out and its lenders, JP Morgan Chase and Company, will take control of the company.
Reader's Digest, with headquarters in Pleasantville, New York, has had a storied history since it began publishing the pocket-sized magazine in the early 1920s. At its peak the magazine sold 18 million copies, which were translated into several foreign languages.
Reader's Digest reduces publication frequency
Like other US publications hit hard by the worsening economy in past years, Reader's Digest has faced circulation declines as readers switched to special interest publications.
