| NEW YORK
NEW YORK Feb 18 The owner of magazine Reader's
Digest, once the staple of doctors' offices and coffee tables,
has filed for bankruptcy for the second time in less than four
years, citing a greater-than-expected decline of the media
RDA Holding Co and more than two dozen affiliates filed for
a pre-negotiated Chapter 11 bankruptcy plan the company says
will allow it to reduce its $534 million debt load by 80
percent, according to documents filed Sunday in U.S. Bankruptcy
court in the Southern District of New York.
Its international operations are not part of the filing.
It is the second time the company filed for bankruptcy
protection since 2009.
Despite emerging from bankruptcy as a smaller company in
2010, "its business plan and financial forecasts did not
adequately account for the steep declines that the media
industry has suffered over the last few years - as evidenced by
Houghton Mifflin Harcourt Publishing Company's recent return to
Chapter 11," Robert Guth, the company's president and chief
executive officer, said in court documents.
Nor did the company's plan "adequately reflect the fragility
of RDA's wide-reaching international footprint," Guth said.
Under the terms of the restructuring plan, $464.4 million of
its senior notes will convert to equity, leaving the company
with $100 million in debt.
Wells Fargo & Co and holders of its senior secured
notes have agreed to $105 million in debtor-in-possession
financing to allow the company to continue operating under
bankruptcy. The company plans to exit bankruptcy within four
months, court documents say.
DeWitt Wallace and his wife Lila Acheson Wallace founded
Reader's Digest in 1922. The magazine offered readers
stripped-down versions of articles about health, home and family
from other publications. It eventually began the best-selling
consumer magazine in the United States. Today it operates print
and digital magazines, books, music and videos worldwide and has
more than $1.1 billion in assets, according to court documents.
Distressed-debt investor Alden Global Capital and hedge fund
Point Lobos Capital LLC are listed as among the company's
largest stakeholders, according to the filing. Luxor Capital
Group, as administrative agent for a $10 million loan, is listed
as one of its largest unsecured creditors.