Reader's Digest files for US bankruptcy

The US publisher of the Reader's Digest has announced its intention to file for Chapter 11 bankruptcy. Reader's Digest Association, owned by the New York private equity firm Ripplewood Holdings since 2007, has reached an agreement in principle with the majority of its secured lenders on the terms of a restructuring plan that aims to significantly reduce its current $2.2bn (£1.3bn) debt burden, through a pre-arranged Chapter 11 protection filing. Only the US brand will be affected while operations in Canada, Latin America, Europe, Africa, Asia and Australia-New Zealand are set to continue as usual. RDA's international operations are expected to have adequate funding based on continuing operations and access to proceeds from the Debtor-In-Possession financing, which involves $150m provided by certain members of the senior lender group. The Association's chief executive officer Mary Berner said that the company will operate normally for now: 'This agreement in principle with our lenders follows months of intensive strategic review of our balance sheet issues to financially strengthen the company. We are gratified to have this support from our secured lender group. The company has strong brands and products, a leadership position in many markets around the world and a solid plan for the future. Restructuring our debt will enable us to have the financial flexibility to move ahead with our growth and transformational initiatives,' she added. The RDA has offices in 44 countries, and produces 50 editions of the magazine.
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