Advanced Marketing enters letter of intent for asset sale; debtor Publishers Group West gets competing offer

By Jennifer Lanning Drey

Portland, Ore., Feb. 13 - Advanced Marketing Services, Inc. has entered into a letter of intent with book distributor Baker & Taylor, Inc. to sell the majority of its assets, excluding Publishers Group Worldwide, according to a company news release.

The letter of intent is subject to negotiation of a definitive asset purchase agreement. Once the agreement is finalized, Advanced Marketing will file a motion with the U.S. Bankruptcy Court for the District of Delaware to request a hearing on the bidding procedures for the sale, according to the release.

"We are pleased to enter into this letter of intent with Baker & Taylor and believe it marks a significant milestone in the restructuring of our business," Gary Rautenstrauch, president and chief executive officer of Advanced Marketing, said in the release.

The company expects the hearing on the bidding procedures to be held Feb. 16 and the sale transaction to close by March 15.

Publishers Group West receives competing offer

Advanced Marketing also received a competing offer from National Book Network Inc. for debtor Publishers Group West Inc.'s distribution agreements and related assets, according to a letter of intent filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

On Jan. 24, Advanced Marketing requested court approval to sell the Publishers Group West assets to Perseus Books, LLC and Client Distribution Services, Inc.

However, National Book Network said in its letter of intent that its offer constitutes a "higher and better" offer that provides substantially greater consideration to the company's estates.

Under the proposed agreement, National Book Network would reimburse Advanced Marketing the $500,000 break-up fee and the up to $500,000 in fees and expenses it would pay Perseus under the agreement between those companies.

In addition, National Book Network would pay each consenting publisher a cash payment of 85% of its gross allowed pre-bankruptcy claims against Publishers Group West in exchange for the claims.

National Book Network would then release 70% of each pre-bankruptcy claim against Publishers Group West and retain the remaining 30% as an unsecured claim in the company's bankruptcy estate, according to the letter of intent.

National Book Network claimed in the letter of intent that its proposal is similar to the Perseus offer, except under the Perseus agreement, payments to consenting publishers would only be 70% of their allowed claims.

In addition, National Book Network said under the Perseus deal, Perseus' unreleased claims would have administrative priority status and be asserted against the estates of both Publishers Group West and Advanced Marketing.

Advanced Marketing, a San Diego-based provider of customized merchandising, wholesaling and contract distribution services, filed for bankruptcy on Dec. 29. Its Chapter 11 case number is 06-11480.

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