UPDATE: Readers Digest Submits Chapter 11 Plan to Bankruptcy Court

(Photo credit: Wikipedia)

RDA Holding Co., publisher of the 91-year-old Reader's Digest magazine, last week submitted its proposed Chapter 11 reorganization plan to United States Bankruptcy Court for the Southern District of New York Judge Robert Drain.

As reported here (see "TUOL" post 2/19/13), in In re RDA Holding Co., Inc. (Docket No. 13-22233), Judge Drain will have to approve the plan that 70 percent of noteholders accepted last month that converts into new equity $231 million in notes, roughly 80 percent of the troubled publisher's debt, according to an article by Bloomberg News. About $244.9 million in notes is being considered a general unsecured claim under the proposed plan, Bloomberg reported.

The plan is hazy about how creditors to the tune of $380 million will be repaid. In the interim, RDA Holding Co. secured a $105 million debtor-in-possession loan from lenders organized by a Wells Fargo & Co. unit. Reader's Digest, which claims assets and liabilities exceeding $1 billion, also filed for bankruptcy in 2009 (see "TUOL" post 8/17/09).

Reader's Digest: Humor In Solvency

 (Photo credit: Wikipedia)

To pare its debt by $465 million, the owner of the venerable Reader's Digest magazine has filed for Chapter  11 bankruptcy for the second time in the past five years, Bloomberg News reported.

In re RDA Holding Co., Inc. (Docket No. 13-22233), filed in the United States Bankruptcy Court for the Southern District of New York, revealed the company that publishes the 91-year old Reader's Digest ("RD") claims both assets and liabilities of more than $1 billion. A victim of declining ad revenues and shifting public taste toward electronic news media outlets, RD last filed for bankruptcy protection in 2009 (See "TUOL" post 8/17/09).

The magazine, which was founded by DeWitt and Lila Wallace, was acquired in 2007 by the Ripplewood Holdings LLC private equity firm for $1.6 billion, according to the Bloomberg News article.  Under a proposed restructuring backed by Wells Fargo & Co., senior notes totaling $465 million would be converted to equity, thereby reducing RDA Holding Co.'s debt by 80 percent and allowing it to emerge from insolvency with $100 million in debt.

RD's Web site boasts that its readership worldwide exceeds 25 million.

Reader's Digest Workforce--the Condensed Version

Image via WikipediaPleasantville, N.Y.-based publisher Reader's Digest, sharing the pain worldwide, has abridged its labor force by 150 jobs, half of which are in the U.S., according to a report in Folio Magazine.

The company wouldn't disclose details about the layoffs, though Folio reports that 30 slots were eliminated at Reiman Publications in Greendale, Wisconsin. Pink slips were doled among the company's domestic and international entities so that the publisher could focus on its more valuable brands, The Family Handyman, Taste of Home and Reader's Digest, according to the Folio story.

Reader's Digest, which emerged from a voluntary Chapter 11 bankruptcy in February 2010 (see "TUOL" post 8/17/09), saw a 4.4 percent boost in 3Q revenues compared to Third Quarter revenues in 2010, and reduced its net loss to $76.8 million from $86.8 million a year ago. The company is headed by CEO Robert Guth, the third person to take the helm of the publishing company in the last year.

Call the Police: Sting Is Blogging

Image by Getty Images via Daylife

When does a rock & roll icon stop being cool?  If you guessed "as soon as he starts blogging for Reader's Digest," give yourself a point.

According to UPI, 58-year-old rock star, actor and activist Sting is collaborating with philanthropist Bobby Sager to blog "Sting and Sager Deliver Hope for the Holidays." Catchy title.

The blog by the Grammy Award-winning native of Wallsend, England, nee Gordon Matthew Sumner, represents ReadersDigest.com's first attempt at celebrity blogging. The Pleasantville, N.Y.-based periodical will translate and distribute Sting's blog on its international Web sites, including Poland, Germany, Singapore, Spain and Canada.

Sting fans may be singing "If I Ever Lose My Faith in You," over the rocker's decision to blog for the decidedly unhip Readers Digest.

Reader's Digest's Latest Chapter Is 11

Image by sono salvo via Flickr

Reader's Digest, founded in 1922 by Lila Bell and DeWitt Wallace, will submit a voluntary pre-packaged Chapter 11 filing in U.S. Bankruptcy Court under a restructuring agreement with its principal lenders.

The bankruptcy move is intended to reduce the publication's debt to $550 million from $2.2 billion. The entire Reader's Digest Association's board of directors, except for CEO Mary Berner, has resigned.

The Pleasantville, N.Y.-based publication's senior lenders include GE Capital, JP Morgan and Bank of America. In 2005, the magazine adopted the slogan: "America in your pocket." Now the magazine's pockets are empty. It would be fitting if the magazine underwent a "condensed" bankruptcy.