Reader's Digest Reaches Deal With Nearly 80 Percent of Secured Lenders
August 21, 2009
The Reader's Digest Association (RDA) yesterday announced that nearly 80 percent of its senior secured lenders have signed on to an agreement in principle for a restructuring plan to significantly reduce its debt burden.
The restructuring agreement, announced on Aug. 17, 2009, provides that the company's senior secured lenders will exchange a substantial portion of the company's $1.6 billion in senior secured debt for equity, and will reduce the company's total debt by 75 percent, from approximately $2.2 billion to $550 million.
RDA elected not to make a $27 million interest payment due on its 9-percent Senior Subordinated Notes due 2017 and intended to use the 30-day grace period to continue discussions with its lender group and other stake-holders regarding the terms of final documentation and to gain additional support for the consensual de-leveraging transaction. Since then, the company says, senior secured lenders representing nearly 80 percent of the dollar value of the outstanding bank debt and nearly 70 percent in number of the investing institutions have signed on to the terms of the deal.
The restructuring agreement, announced on Aug. 17, 2009, provides that the company's senior secured lenders will exchange a substantial portion of the company's $1.6 billion in senior secured debt for equity, and will reduce the company's total debt by 75 percent, from approximately $2.2 billion to $550 million.
RDA elected not to make a $27 million interest payment due on its 9-percent Senior Subordinated Notes due 2017 and intended to use the 30-day grace period to continue discussions with its lender group and other stake-holders regarding the terms of final documentation and to gain additional support for the consensual de-leveraging transaction. Since then, the company says, senior secured lenders representing nearly 80 percent of the dollar value of the outstanding bank debt and nearly 70 percent in number of the investing institutions have signed on to the terms of the deal.
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