RDA Holding Co., "parent" of the historic magazine Reader's Digest, entered with the second bankruptcy filing in three and a half years to reduce debt at 465 million dollars (nearly 350 million) and concentrate activity in United States, where the online edition has been gaining strength.
At 91 years, Reader's Digest is just another victim of the paradigm shift in the media: readers online by exchanging the role and revenues have plummeted. "In December editions sold more than online banking," said Robert Guth, executive director of Reader's Digest, quoted by Bloomberg.
The magazine founded by DeWitt and Lila Wallace in 2007 was bought by a private investor group, called Ripplewood Holdings LLC, which paid 1600 million (1200 million). Buyers were also with the company's debt, worth 800 million dollars (about 600 million).
In August 2009, the company had an order of protection against creditors, arguing with the drop in advertising revenue and the burden of debt incurred when purchasing. At that time, agreed to reduce debt by 75% to 550 million dollars (411 million euros).
Now the company has about 1100 million dollars in assets and liabilities from 1200 million dollars (nearly one billion euros). With this bankruptcy filing, the company will exchange about $ 465 million of debt into shares, according to Bloomberg. The restructuring plan provides that within six months the company has $ 100 million in debt.
"We have an ongoing process to simplify and streamline our international business through the opening of our local markets to third parties, other publishers, other investors, and this has been a big part of our effort to streamline the company and generate resources to reduce debt, "said Robert Guth.
The magazine is read by over 25 million people, according to information available on the site. The company has 75 publications in total, including 49 editions of Reader's Digest, Taste of Home, Family Handyman and Birds & Blooms.
With this bankruptcy filing, RDA Holding Co. hopes to achieve a "significant reduction in debt" and "reset" the business, concentrating resources in journals published in the United States. These "showed a new vitality in results in our transformation efforts, particularly in the digital area," said Executive Director.