Reader's Digest again files for bankruptcy

RDA Holding Co, the publisher of the venerable monthly household journal, the Reader's Digest magazine, yesterday filed for Chapter 11, the second time in fours yerars of as the  91-year old magazine is seeking bankruptcy protection from creditors.

In documents filed with the US Bankruptcy Court in New York, RDA listed assets and debt of more than $1 billion. Among the company's largest unsecured creditors were Luxor Capital Group with a $10 million loan, and the US Federal Trade Commission, with $8 million.

In order to reduce debt by $465 million, the New York-based company said that it has reached a pre-petition accord with its secured lenders and more than 70 per cent of its secured note holders to implement the pre-arranged restructuring.

''The Chapter 11 process, which will facilitate a significant debt reduction, will enable us to continue to redefine our business by focusing our resources on our strong North American publishing brands, which have shown a new vitality as a result of our transformation efforts, particularly in the digital arena,'' said Roberet Guth, CEO of Readers Digest in a statement.

Under the pre-arranged deal, secured lenders have agreed to convert around $465 million of debt to equity and secured commitments for $105 million in debtor-in-possession financing for day-to-day operations.

RDA expects to emerge from bankruptcy in less than six months with a debt of around $100 million - almost an 80 per cent reduction from current levels.