Business News

American Media, Inc. Advances to Next Stage of Financial Restructuring

Thursday 18. November 2010 - Leading Media Company Seeks to Strengthen Financial Position Through Prepackaged Chapter 11 Filing With the Support of Its Unsecured Bondholders and Secured Lenders

American Media, Inc. (AMI) today commenced the next phase of its previously announced restructuring, which is expected to significantly de-lever its balance sheet and improve its already strong cash flow and cash on hand.
Specifically, and consistent with the terms of the restructuring support agreement the Company signed with bondholders holding more than 75% of their bond debt and secured lenders holding more than 70% of their bank debt, earlier today American Media and certain of its subsidiaries filed a prepackaged plan of reorganization (the “Prepackaged Plan”) and chapter 11 petitions in the United States Bankruptcy Court for the Southern District of New York. The Prepackaged Plan, which has been approved by the majority of creditors entitled to vote on the Prepackaged Plan, contemplates that, among other things, holders of secured term facility claims will receive a combination of cash and new second lien notes; holders of secured revolver claims will be paid in full; holders of subordinated notes will receive stock in the reorganized Company; and holders of trade claims will be paid in full.
In conjunction with today’s filing, the Company also filed a variety of motions to continue to support its employees, customers and vendors during the financial restructuring process. The Company has filed motions seeking permission to, among other things, continue employee wage and benefits programs; honor current customer programs without interruption; and pay trade creditors in the ordinary course of business. American Media expects that cash on hand and cash from operating activities will be adequate to fund its cash needs as it proceeds with its financial restructuring and therefore does not intend to seek debtor-in-possession financing.
“American Media is engaging in this strategy from a position of financial strength and confidence,” said David Pecker, Chairman, President and CEO of American Media. “It will provide the Company with the ability to compete even more aggressively with our peers in the industry. During this period of sixty days or less, there will be no impact on our employees, vendors, or advertisers, as well as our subsidiary company DSI and its customers and partners.”
“Publications will function seamlessly, staff will be unaffected by the reorganization and customers should not notice any difference during this short process. Our advertisers, vendors and publishing services clients have already expressed strong support and confidence,” continued Mr. Pecker. “They understand that American Media will be a stronger and healthier company following this restructuring.”
American Media has retained Akin Gump Strauss Hauer & Feld LLP as legal counsel.
The Company’s principal chapter 11 petition has been assigned case number 10-16140. Additional information about the Company’s restructuring, including the disclosure statement describing the Prepackaged Plan, is available at www.kccllc.net/AMI. You may also receive information from the Company’s restructuring hotline at (877) 660-6698.
This press release is for informational purposes only and shall not constitute a solicitation to accept or reject the Prepackaged Plan or an offer to sell or the solicitation of an offer to buy securities, nor shall there be any offer or sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.