AMI in Another Debt-for-Equity Swap
The National Enquirer publisher is going through its second restructuring in two years.
July 2, 2010
American Media Inc. has returned to its lenders, working out a deal with 90% of its bondholders to exchange AMI's bonds for shares of the company's common stock. The agreement represents the second time in the past 18 months the National Enquirer and Star publisher has had to to restructure its debt.
AMI, in February 2009, closed a restructuring agreement after a year in negotiations with its bondholders that transferred 95% of the company to lenders, including Angelo, Gordon & Co., Avenue Capital Management II, Credit Suisse Securities and others.
In the most recent agreement, AMI's debt will be reduced by $200 million, trimming its leverage from 7.2x to 5.1x earnings. The company said it would launch the debt-for-equity exchange in July and expects to finalize it in August.
Moelis & Co. advised AMI on the transaction.
The news comes as others in the mainstream media face the same pressure. Money losing Newsweek, perhaps most notably, is nearing the final stage of an auction reportedly attracting OpenGate Capital, among other bidders.
AMI has endured a roller coaster ride since Evercore Capital Partners acquired the publisher in a 1999 deal. The firm executed a recap in 2003, bringing in Thomas H. Lee Partners as a co-investor in a deal that valued the company at $1.5 billion. The company, since then, has been a victim of the move to digital.
David Pecker, AMI's CEO, has overseen the company since his appointment in 1999.
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