Bankruptcy judge OKs $105M loan to Reader's Digest
NEW YORK (AP) — The parent company of Reader's Digest said Monday that it has final court approval to borrow $105 million from the lenders who will own the magazine company when it emerges from its second bankruptcy process in less than four years.
RDA Holding Co. said the funding, in conjunction with cash generated from operations, will help support the company while court-monitored restructuring continues.
U.S. Bankruptcy Judge Robert Drain also gave final approval to other motions, including the authority to pay employees and freelancers, and retaining various professional advisers.
RDA filed for bankruptcy protection in February, with CEO Robert E. Guth saying that despite a company transformation that started 18 months earlier, it could not renegotiate its debt appropriately.
Earlier in the bankruptcy proceeding, the company agreed to convert about $465 million in debt into equity stakes.
It is the second bankruptcy process for the company, which filed for Chapter 11 protection in 2009 in the midst of the recession and dwindling advertising and circulation. The company emerged from bankruptcy in early 2010 with less debt, but has still struggled.
Reader's Digest paid circulation fell 0.6 percent to 5.5 million at the end of last year, according to the Alliance for Audited Media. That was about where it stood after cutting its guaranteed circulation in 2009. In 1995 Reader's Digest had circulation of more than 15 million.
The circulation-tracking company said Reader's Digest is the fifth-biggest U.S. consumer magazine by circulation, behind two AARP publications, Game Informer Magazine, and Better Homes and Gardens.