American Media May Print Going-Concern Warning

NEW YORK (The Deal) -- Three-and-a-half years after emerging from bankruptcy protection, American Media, which publishes magazines including the National Enquirer, Shape and Star, appears to be hitting another shoal of financial difficulties.

The Boca Raton, Fla.-based company said in a Tuesday filing with the Securities and Exchange Commission that its 2013 annual financial report may include qualifying language about its ability to continue as a going concern, which would violate one of its debt covenants.

The privately-held publisher is still working on its 2013 annual report. In the meantime, it's negotiating with its lenders in hopes of securing a covenant waiver through July 15, the date on which it hopes to release the year-end report.

"At this time, there can be no assurance that the report of its independent registered public accounting firm to be included in such Form 10-K will not contain an explanatory paragraph regarding the company's ability to continue as a going concern," American Media said in the July 1 filing.

The company's $40 million revolver led by JPMorgan Chase Bank NA, which matures on Dec. 22, 2015 and bears interest at Libor plus 600 basis points, contains a covenant that requires the company to file its audited annual financial statements within 90 days of the end of its fiscal year. The due date for the annual report was June 30.

Under that covenant, the audited financial report must not contain qualifications about the company's ability to continue as a going concern.

A violation of the covenant would result in a default after five business days' notice from the administrative agent under the revolving credit agreement.

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