How is the magazine business?

[Mick Mc]

I just saw this...




News-press.com
Bonita Springs magazine publisher Source Interlink declares Bankruptcy

Source Interlink Cos., the Bonita Springs publisher of Street Rodder, Motor Trend, Hot Rod and Street Chopper magazines controlled by billionaire Ron Burkle’s Yucaipa Cos., sought bankruptcy protection as it moves to become a private company.

The company, which also distributes newspapers and other publications, listed debt of $1.9 billion and assets of $2.4 billion as of April 24 in Chapter 11 documents filed yesterday in U.S. Bankruptcy Court in Wilmington, Del.

Source Interlink publishes 75 magazines, mostly about cars and motorcycles, putting it at the nexus of two struggling industries. U.S. magazine advertising revenue in the first quarter fell 20 percent from a year earlier, according to the Publisher’s Information Bureau, an industry group. U.S. auto sales tumbled 37 percent in March. Source Interlink hasn’t reported a profit since the second quarter of 2007.
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“This restructuring will materially reduce our interest expense and debt levels,” Source Interlink Chief Executive Officer Greg Mays said today in a statement. The company also runs Web sites and distributes CDs, video games and DVDs in the U.S.

The company bought the automotive magazines, as well as Surfer, Lowrider, Power & Motoryacht and Snowboarder, from Primedia Inc. in 2007 for about $1.2 billion. It also acquired Soap Opera Digest and Soap Opera Weekly.

Under an agreement with its lenders, about $1 billion of existing debt will be canceled and about $100 million additional liquidity will be provided, the company said. Source Interlink said a lender-approved plan of reorganization will be filed.

In February, the company won a temporary court order prohibiting publishers from blocking magazine shipments to its distribution business. The publishers had objected to a 7-cent delivery surcharge, imposed by the company and since rescinded, according to court papers.

AEC Associates LLC, directly and indirectly, through Digital On-Demand Inc.; Yucaipa One-Stop Partners LP; Yucaipa AEC Associates LLC; OA3 LLC and R. Burkle, own 48.37 percent of the common stock of the company, according to court papers. Scopia Management Inc. owns 9.01 percent, Goldman Sachs Group owns 17.7 percent and the remaining common stock is owned by Dimensional Fund Advisors.

The case is Source Interlink Companies Inc., 09-11424, U.S. Bankruptcy

MORE…...........
Source Interlink Files Pre-Packaged Bankruptcy
by Judith Rosen—Publishers Weekly, 4/28/2009 8:16:00 AM

After trying to right itself financially at the start of the year by charging more for distributing magazines, then suing competitors and magazine publishers with collusion in U.S. District Court in the Southern District of New York when the increase was rejected, Source Interlink is trying a different tack. This morning, it filed Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Delaware as part of a pre-packaged bankruptcy plan. According to Source, the bankruptcy is part of an agreement with lenders to eliminate $1 billion dollars of existing debt and to privatize the company. And Source said it expects to come out of the prepackaged bankruptcy in 35 days.

Some may wonder if that’s possible given the level of debt reported in the Bonita Springs, Fl.-based company’s Chapter 11 filing, which owes more than $1 billion and has assets of between $500 million and $1 billion. Leading off the list of the top 30 creditors are: HSBC Bank, which is owed $455 million; Time Warner Retail, $75.5 million; and Comag Marketing Group, $53.2 million. Levy Home Entertainment, which handles book distribution for Source, is out over $14 million. Source said it will pay all creditors in full if they agree to maintain current credit and payment terms.Court, District of Delaware (Wilmington).




Now I just need to find 'the rest of the story'





Mick