Reader’s Digest Owner Approved to Borrow $105 MillionErik Larson
RDA Holding Co., the publisher of Reader’s Digest magazine, won final court approval to borrow $105 million from a group of lenders while it reorganizes in bankruptcy protection.
The so-called debtor-in-possession loan arranged by a Wells Fargo & Co. unit was approved today by U.S. Bankruptcy Judge Robert Drain at a hearing in White Plains, New York, where the company is based.
The 91-year-old publisher filed a Chapter 11 bankruptcy petition on Feb. 17, the second such filing in four years, in a bid to shed debt as consumers shift to electronic media. The company had reached a restructuring deal with its secured lender and more than 70 percent of its secured noteholders to convert $465 million of senior notes into equity in the company.
The financing, arranged by Wells Fargo Principal Lending LLC as administrative agent, includes a $45 million term loan, $11 million of which was approved on an interim basis last month; a refinancing term loan of $49.6 million and $9.5 million in letters of credit that are outstanding under its current credit agreement, according to court papers.
Reader’s Digest, founded by DeWitt and Lila Wallace, went public in 1990. An investor group led by private-equity firm Ripplewood Holdings LLC bought it in 2007 for $1.6 billion and the assumption of about $800 million in debt.
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, U.S. Bankruptcy Court, Southern District of New York (White Plains). The previous bankruptcy was In Re Reader’s Digest Association Inc., 09-23529, U.S. Bankruptcy Court, Southern District of New York (White Plains).