US: Readers Digest to file for bankruptcy

The publisher of Reader's Digest, the US general interest magazine, has announced it will file for bankruptcy protection with a plan to swap a portion of its debt for ownership of the company,…

Lawyers Weekly • 19 August 2009 • Big Law

The publisher of Reader's Digest, the US general interest magazine, has announced it will file for bankruptcy protection with a plan to swap a portion of its debt for ownership of the company, Associated Press reports.

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Reader's Digest Association, owned by the New York private equity firm Ripplewood Holdings since 2007, said on Tuesday that it had reached an agreement in principle with a majority of secured lenders to erase a portion of the $US1.6 billion ($1.93 billion) they hold in senior secured notes. The lenders will get ownership in return.

The planned filing does not include operations outside the United States.

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In a statement, Reader's Digest CEO Mary Berner said the agreement follows "months of intensive strategic review of our balance-sheet issues."

The company intends to seek further agreements from lenders and other stakeholders before making a formal bankruptcy filing within a month.

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