* Cuts debt by 75 percent
* Obtains bankruptcy exit financing of $525 million
* New board of directors
(Adds details previous and current debt, background on former owner Ripplewood)
By Chelsea Emery
NEW YORK, Feb 22 (Reuters) - Magazine and website publisher Reader’s Digest Association Inc emerged from bankruptcy after cutting debt by 75 percent, the company said on Monday.
Reader’s Digest, which filed for Chapter 11 protection from creditors in August, comes out of bankruptcy with $525 million in exit financing and a new board of directors that includes Fredric Reynolds, former chief financial officer of CBS Corp (CBS.N).
The company, best known for its namesake magazine, had been laboring under almost $2.3 billion in debt before filing for bankruptcy. But under its reorganization, the company was able to cancel hundreds of millions of dollars in debt and restructure other loans to save money.
Holders of Reader’s Digest pre-petition senior secured debt will receive almost all of the new common stock. Private equity firm Ripplewood, which bought the company in 2007 for $1.6 billion, has no ownership stake going forward.
Over time, Reader’s Digest has moved away from being known solely for its cornerstone magazine, expanding into some 78 branded websites, and selling as many as 40 million books, music and video products around the world each year. It also publishes food and lifestyle magazine Every Day with Rachael Ray.
Chief Executive Mary Berner has remained at the helm of the company through the restructuring. The new board of directors also includes Karen Osar, former chief financial officer of Chemtura Corp CEMJQ.PK and Peter Stern, the chief strategy officer of Time Warner Cable Inc. TWC.N.
Moody’s Investors Service has assigned a B1 Corporate Family Rating (with Stable outlook) to the company and its exit financing. Standard & Poor’s issued a B rating to the exit financing package.
Reader’s Digest said it also has access to an additional $50 million of revolver credit.
The case is Re Reader’s Digest Association Inc, U.S. Bankruptcy Court, Southern District of New York, No. 09-23259. (Reporting by Chelsea Emery; editing by John Wallace and Derek Caney)