RDA Holding Co., the publisher of Reader’s Digest magazine, filed a bankruptcy reorganization plan to shed 80 percent of its debt by converting $231 million of notes into new equity.
The plan, filed late yesterday in White Plains, New York, where the company is based, affirms a deal reached with 70 percent of noteholders before the Chapter 11 filing last month. Another $244.9 million in notes is to be treated as a general unsecured claim, according to court papers.
The filing, which needs the approval of U.S. Bankruptcy Judge Robert Drain, was made hours after RDA won final court approval to borrow $105 million from a group of lenders while it reorganizes. The so-called debtor-in-possession loan was arranged by a Wells Fargo & Co. (WFC) unit.
The 91-year-old publisher filed for bankruptcy on Feb. 17, its second such filing in four years, to reduce debt as consumers shift to electronic media. The company had already made the restructuring agreement with its secured lender and more than 70 percent of its secured noteholders.
The plan didn’t say how much unsecured creditors holding $380 million in debt may get paid back on their claims. A total of $475 million in debt will be converted to equity, including $45 million in fresh cash loaned in bankruptcy, according to court papers.
The company previously filed for bankruptcy in August 2009, citing a drop in advertising spending and the debt load incurred in its acquisition. In its filing last month, the company listed more than $1 billion in debt.
The case is In re RDA Holding Co. Inc., 13-22233, and the previous bankruptcy was In Re Reader’s Digest Association Inc., 09-23529, U.S. Bankruptcy Court, Southern District of New York (White Plains).
To contact the reporter on this story: Erik Larson in New York at firstname.lastname@example.org.