(Reuters) - Struggling tabloid publisher American Media Inc has secured the backing of many of its creditors for a new bond offering to refinance $570 million in existing debt, the Wall Street Journal said.
The backing of creditors comes as a ray of hope for the publisher of the National Enquirer and Star magazines, which has been hit hard by a relentless decline in ad sales and burdened by more than $1 billion in debt.
Under the terms of the bond offering, holders will be able to exchange existing debt for discounted notes that pay higher interest and warrants for up to a 20 percent stake in the company.
The exchange offer gives American Media enough running room to continue improving its profitability, the paper said citing sources familiar with Thomas Lee Partners, a private equity firm which owns the publisher along with Evercore Partners.
American Media had earlier said if it couldn’t refinance at least $389.5 million in debt by February 1, 2009, it would have to liquidate assets or seek protection from creditors.
“This transaction, if it’s successful, will take the pressure off them,” said John Page, a senior analyst at Moody’s Investors Service.
Reporting by Sweta Singh in Bangalore; Editing by Kim Coghill
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