Reader’s Digest Approved for Turnaround Plans
A great American magazine has been approved in bankruptcy court for a turnaround plan. Bondholders had demanded certain revisions to the original plan but the approval is now complete:
U.S. Bankruptcy Judge Robert Drain said yesterday he would approve the so-called disclosure statement, which explains terms of the reorganization to creditors. Some changes still must be made before final approval, including wording that would outline the maximum pay for some executives, he said.
“I believe it is worthwhile to have the plan go out for a vote,” Drain said at a hearing in White Plains, New York.
Reader’s Digest, which publishes the world’s largest circulation magazine, plans to repay most of its trade creditors in full.
Bondholders owed $682 million would receive warrants for 6.5 percent of the stock in the reorganized company, if it is valued at more than $1.8 billion. Under a previous plan they would have had to pay to exercise the warrants.
“They withdraw their objections,” Scott Hazan, a lawyer for the unsecured creditors’ committee, said at the hearing. “The distribution to noteholders is in a form they found more palatable.”
