Reader's Digest to file for bankruptcy

The publisher of the world's largest-circulated magazine, Reader's Digest-sold across dozens of countries including India, has decided to file for bankruptcy in the US, but its operations in rest of the world would remain unaffected.

The filing for bankruptcy protection by Reader's Digest Association (RDA), the company said in a statement, is aimed at reducing its debt burden by 75 per cent and to strengthen its future financial position.

RDA, a global multi-brand media and marketing company based in the US, has offices in 44 countries and sells books, magazines, music, video and educational products reaching a customer base of 130 million in 78 countries.

It publishes 94 magazines, including 50 editions of Reader's Digest, the world's largest-circulated magazine and sells approximately 40 million books, music and video products across the world each year.

The company said it has reached an in-principle agreement with its lenders to reduce its debt from $2.2 billion to $550 million and its 'Debt-for-Equity Restructuring Plan' is supported by a majority of the lenders.

The restructuring agreement provides that the company's senior secured lenders will exchange a substantial portion of the company's $1.6 billion in senior secured debt for equity and provide for a transfer of ownership of the company to the lender group.