Business News
American Media Inc. Announces Financial Restructuring
Monday 01. November 2010 - Leading Media Company Seeks to Strengthen Financial Position Through Solicitation of Votes on a Prepackaged Chapter 11 Filing; Reaches Agreement with Its Unsecured Bondholders to Support Restructuring
American Media Inc. (AMI) today announced its intention to engage in a financial restructuring through solicitation of a prepackaged Chapter 11 plan of reorganization. The Company has informed its investors that, in approximately two weeks, upon receiving the requisite number of votes from its creditors, the Company will initiate a prepackaged Chapter 11 filing in order to confirm and consummate its Chapter 11 plan. The Company’s reorganization is premised around a debt-for-equity exchange with a group of its bondholders, approximately 80% of which have agreed to support the restructuring by executing a restructuring support agreement with the Company. Through the restructuring, the Company will significantly de-lever its balance sheet and improve its already strong cash flow and cash on hand, and ultimately will improve the growth and success of the Company. During this time, all Company operations should function seamlessly.
“I want to thank Mike Elkins and his team at Avenue Capital as well as the team at Angelo Gordon for taking an active leadership role in supporting this process by putting additional money into AMI to facilitate our transaction,” said David Pecker, Chairman, President and CEO of American Media Inc. “This demonstrates their total commitment to management and the Company. All of us are very excited about the future of AMI under this new ownership structure.”
“For our advertisers, employees, customers and vendors, this short period will be business as usual, with considerable upside in the future,” continued Mr. Pecker. “American Media is engaging in this strategy from a position of financial strength and confidence. It will provide us with the ability to compete even more aggressively with our peers in the industry. During this period, there should be no impact to our employees, vendors, or advertisers, as well as our subsidiary company DSI and its customers and partners.”
Upon receiving the requisite votes on its prepackaged Chapter 11 plan during the period in which votes are being solicited, the Company will file for chapter 11, and will thereafter seek to emerge from bankruptcy in less than sixty days. That process will, in turn, allow the Company to restructure its debt, including the debt-for-equity exchange that will further improve the Company’s financial position.
“The reorganization should not affect American Media’s operations. Publications will function seamlessly, staff will be unaffected by the reorganization and customers should not notice any difference during the 60 day process. I want to thank in advance all of our advertisers, vendors and publishing service clients for their support,” added Mr. Pecker. “They realize we will be a stronger and healthier company after the consummation of the restructuring.”
AMI also announced today that it has terminated the previously announced offer to exchange (the “Exchange Offer”) all of the outstanding 14% Senior Subordinated Notes due 2013 (the “Subordinated Notes”) issued by AMI’s operating subsidiary, American Media Operations, Inc. (“AMO”), for a combination of cash and shares of common stock, par value $0.0001 per share, of AMI, and cash tender offer (the “Cash Tender Offer” and, together with the Exchange Offer, the “Offers”) for all of AMO’s outstanding 9% Senior PIK Notes due 2013 (the “PIK Notes”), and related consent solicitations. As a result of the termination of the Offers, no Subordinated Notes or PIK Notes will be accepted for exchange or purchase, and all such notes tendered pursuant to the Offers will be promptly returned to their respective tendering holders.
This press release is for informational purposes only and shall not constitute a solicitation to accept or reject the proposed plan of reorganization referred to herein 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.