Reader's Digest granted approval to sell notes to refinance exit loan

By Caroline Salls

Pittsburgh, Jan. 25 - Reader's Digest Association, Inc. obtained court approval to enter into an agreement under which it could potentially issue and sell notes to refinance its proposed exit financing obligations, according to a Monday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The company said its debtor-in-possession facility will be converted into a new first-priority exit term loan on the effective date of its plan of reorganization or be paid off in full in cash.

Also under the plan, the company will enter into a new second-priority term loan and reinstate its euro term loan.

Reader's Digest said the plan allows it to refinance the new term loans and reinstated euro term loan at any time.

As part of a proposed refinancing, the company said it is working with J.P. Morgan Securities Inc., Goldman, Sachs & Co., Credit Suisse (USA) Securities, Inc. and potentially some other parties for a proposed purchase and sale of senior secured fixed-rate notes and/or senior secured floating-rate notes.

These initial buyers will work with the company to prepare offering materials to be used in a road show to identify qualified institutional purchasers, to whom the initial purchasers will resell the securities.

The company said the terms of the purchase agreement, including pricing and cost, are not yet finalized, and Reader's Digest has not made a final decision as to whether to proceed with the purchase agreement.

However, by taking advantage of current market conditions and locking in commitments as soon as possible, the company said it expects to be able to refinance the exit facility obligations.

The company said it will also explore the possibility of obtaining alternative financing on better economic or other terms before entering the purchase agreement.

Reader's Digest, a Pleasantville, N.Y., publishing company, filed for bankruptcy on Aug. 24. Its Chapter 11 case number is 09-23529.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.