"Reader's Digest" Parent Files for Chapter 11 Protection

Reader's Digest parent company RDA Holding announced Sunday that it has reached an agreement with its secured lender and more than 70% of its secured noteholders to implement a financial restructuring.

Pursuant to this agreement, RDA has filed for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court for the Southern District of New York. According to a press release, the filing covers only RDA's U.S. business, and not its international operations. The company expects to remain under bankruptcy protection for less than six months.

Simultaneously with the filing, RDA entered into an agreement with its secured lender and its secured noteholders, pursuant to which $465 million of the company's secured debt will be converted into equity (owned by the lenders). This will permit the company to emerge from bankruptcy with 80% of its debt extinguished, and only $100 million remaining, the company said.

RDA's lenders have agreed to give the company up to $45 million in new financing to keep it in business during the period of restructuring. Thus, the company says, its Chapter 11 filing "is not expected to impact the Company's day-to-day operations. Reader's Digest will continue to publish throughout the process. Furthermore, it says its pension plan "remains overfunded and will continue to be used to support its retirees."


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2262704, ~/Articles/ArticleHandler.aspx, 8/2/2014 1:34:21 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.