Reader’s Digest to Exit Bankruptcy
February 18, 2010
Reader’s Digest expects to emerge from bankruptcy promptly, after delaying its exit due to issues with its U.K.-based subsidiary, the company said Wednesday. But while this means the publisher will soon leave Chapter 11 protection, it may spell the end of its U.K. operations.
The publishing company had temporarily delayed its exit from bankruptcy because U.K. pension regulators had not approved an agreement between subsidiary RDA UK, pension plan trustees and the UK Pension Protection Fund to settle a pension plan liability, Reader's Digest said in a statement.
However, now RDA UK has filed for an administration proceeding in the U.K., declaring itself insolvent, which clears the way for Reader’s Digest to exit bankruptcy in the U.S. Though this could mean the company's operations in the U.K. will cease to be. “Absent an agreement, RDA UK is financially unable to meet those [pension] obligations and sustain its operations,” the statement said.
The company issued $525 million in floating-rate notes due 2017 on Feb. 2 in order to help fund its exit financing.
The Pleasantville, N.Y.-based publisher won bankruptcy court approval on Jan. 15 for its reorganization plan, which will cut its debt to $555 million from $2.2 billion. It filed for bankruptcy last August.
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