Reader's Digest files bankruptcy

Iconic magazine Reader's Digest publisher RDA Holding Co. filed for bankruptcy to cut its US$465 million debt and focus on electronic media, the Wall Street Journal reports.

The 91-year-old magazine was founded by DeWitt and Lila Wallace and went public in 1990. An investor group, led by private-equity firm Ripplewood Holdings LLC bought it in 2007 for US$1.6 billion and the assumption of about US$800 million in debt.

This is the second time the company filed for bankruptcy. In August 2009, it cited a drop in advertising spending and the debt load incurred in its acquisition.

RDA said more than 70% of its secured note-holders have agreed to convert the debt to equity in a "prearranged" bankruptcy restructuring plan that it hopes to complete within six months. It also secured a US$105 million bankruptcy loan from a group of senior creditors.

[Photo: Reuters]

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