Angeina Jolie appears in a cover story in the June issue of Reader's Digest magazine. (Via MerlinFTP Drop). Handout(Photo: Reader's Digest)
Reader's Digest is banking on a second circuit through bankruptcy court to shore up its fortunes.
RDA Holding, parent company of the Reader's Digest Association, filed Sunday for Chapter 11 reorganization and put in motion a restructuring plan with its creditors that would convert about $465 million in debt to equity. It also has a commitment for $105 million in debtor-in-possession financing.
"After considering a wide range of alternatives, we believe this course of action will most effectively enable us to maintain our momentum in transforming the business," says CEO Robert Guth.
Like many print publisher, RDA has seen the fortunes of its largely print-based publications -- including its flagship Reader's Digest -- founder as the shift to digital has hurt subscriptions and newsstand sales.
The company, which says it has more than "21 market leading brands in 76 countries," originally filed for bankruptcy protection in August 2009 and emerged from it in February 2010. But its comeback has been hampered by lingering debt and declines in Europe and Asia.
Reader's Digest, which has been around for more than 90 years, remains the world's largest circulation magazine. And CEO Robert Guth says the company is gaining traction in digital.
He says this second bankruptcy filing "will enable us to continue to define our business by focusing our resources on our strong North America publishing brands, which have show a new vitality as a result of our transformation efforts, particularly in the digital arena."
The company will continue to publish its magazines during the restructuring period and says it expects to conclude its reorganization in about six months.