Reader's Digest: Lenders On Board With Ch. 11 Plan

PLEASANTVILLE, N.Y. (AP) — Reader's Digest Association Inc., publisher of the popular monthly magazine and dozens of other titles, said Thursday it has 80 percent of its senior secured lenders on board with a planned Chapter 11 reorganization.

The company announced earlier this week that it will file for bankruptcy protection within 30 days. It plans to cut its debt from $2.2 billion to $550 million, giving lenders control of the company in return.

Its main creditors, led by JPMorgan Chase, include GE Capital, Aries Management, DK Partners, Regiment Capital and Merrill Lynch.

The company has been struggling with a heavy debt burden since Ripplewood Holdings LLC, a New York private equity firm, led a consortium of investors in a $1.6 billion buyout of the company in 2007.

Along with some underperforming units, the company's flagship magazine has seen a long decline, with circulation down from a peek of over 17 million in the 1970s to just above 8 million last year.

On Monday, the company said it will skip a $27 million interest payment on its debt as it looks to build support for the restructuring among creditors.