American Media Lenders Will Swap Second-Lien Debt for PIK Notes
Bondholders of American Media Inc. agreed to restructure most of the company’s $104.9 million in second-lien notes, according to a statement from the publisher of the National Enquirer.
Investors have agreed to exchange about 90 percent of the New York-based company’s 13.5 percent securities due in 2018 for a new series of 10 percent second-lien notes with a payment-in-kind feature, American Media said in the statement. Payment-in-kind borrowings allow the issuer to pay interest with additional debt.
The agreement may save American Media $12 million annually in cash interest payments, which the company will use to repurchase some of its first-lien bonds, according to the statement.
The second-lien notes were issued in December 2010, the same month American Media emerged from a prepackaged bankruptcy. The securities are rated CCC- by Standard and Poor’s, according to data compiled by Bloomberg.
American Media’s $362.6 million of 11.5 percent, first-lien notes due in December 2017 traded at 102.25 cents on the dollar to yield 10.81 percent on Sept. 23, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The second-lien bonds were quoted at face value to yield 13.48 percent at 11:00 a.m. today, according to prices compiled by Bloomberg.
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