April 28 (Bloomberg) -- Source Interlink Cos., the publisher of Motor Trend, Hot Rod and Street Chopper magazines controlled by billionaire Ron Burkle’s Yucaipa Cos., sought bankruptcy protection as it moves to become a private company.

The company, which also distributes newspapers and other publications, listed debt of $1.9 billion and assets of $2.4 billion as of April 24 in Chapter 11 documents filed yesterday in U.S. Bankruptcy Court in Wilmington, Delaware.

Source Interlink publishes 75 magazines, mostly about cars and motorcycles, putting it at the nexus of two struggling industries. Iconic Motor Trend is in bankruptcy as Chrysler LLC and General Motors Corp. face a similar fate this week and next month.

“This restructuring will materially reduce our interest expense and debt levels,” Source Interlink Chief Executive Officer Greg Mays said today in a statement. The Bonita Springs, Florida-based company also runs Web sites and distributes CDs, video games and DVDs in the U.S.

U.S. magazine advertising revenue in the first quarter fell 20 percent from a year earlier, according to the Publisher’s Information Bureau, an industry group. U.S. auto sales tumbled 37 percent in March. Source Interlink hasn’t reported a profit since the second quarter of 2007.

Acquired from Primedia

The company bought the automotive magazines, as well as Surfer, Lowrider, Power & Motoryacht and Snowboarder, from Primedia Inc. in August 2007 for about $1.2 billion. It also acquired Soap Opera Digest and Soap Opera Weekly.

Primedia, controlled by private-equity firm Kohlberg Kravis Roberts & Co., put its magazine group up for sale to pay off debt and focus on its free auto and real estate guides. The company also sold its Channel One educational television.

Under an agreement with lenders, about $1 billion of existing debt will be canceled and about $100 million additional liquidity will be provided, Source Interlink said. The company said a lender-approved plan of reorganization will be filed.

In February, the company won a temporary court order prohibiting publishers from blocking magazine shipments to its distribution business. The publishers had objected to a 7-cent delivery surcharge, imposed by the company and since rescinded, according to court papers.

AEC Associates LLC, directly and indirectly, through Digital On-Demand Inc.; Yucaipa One-Stop Partners LP; Yucaipa AEC Associates LLC; OA3 LLC and R. Burkle, own 48.37 percent of the common stock of the company, according to court papers. Scopia Management Inc. owns 9.01 percent, Goldman Sachs Group owns 17.7 percent and the remaining common stock is owned by Dimensional Fund Advisors.

Former President Bill Clinton left his partnership with Burkle’s Yucaipa Cos. in October 2007 while U.S. Secretary of State Hillary Clinton campaigned for president. He previously earned $15.4 million in other fees from Yucaipa since 2003, according to tax documents the Clintons released in April 2008.

The case is Source Interlink Companies Inc., 09-11424, U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporter on this story: Dawn McCarty in Wilmington, Delaware at dmccarty@bloomberg.net.

Last Updated: April 28, 2009 09:01 EDT