Source Interlink Companies - publisher of Sail and Power & Motoryacht magazines - reached a restructured agreement with its lenders to eliminate about $1 billion of debt and privatize the company.
Source Interlink publishes more than 75 magazines for consumer audiences, including Motor Trend, Automobile, Hot Rod, Snowboarder, Stereophile and Surfer.
Under the agreement, the lenders will cancel nearly $1 billion of the company's existing debt and provide about $100 million in additional liquidity, according to a company release. Source Interlink reportedly will pay all of its vendors in full and on time if they agree to maintain current credit and payment terms.
To facilitate the restructuring, Source Interlink filed a lender-approved, prepackaged Plan of Reorganization under Chapter 11 in the U.S. Bankruptcy Code. The company anticipates it will emerge within 35 days of the April 27 filing.
"This restructuring will materially reduce our interest expense and debt levels, substantially improve free cash flow, and allow us to capitalize on several operational opportunities to further improve and grow our business," said Greg Mays, chairman and CEO of Source Interlink, in the statement.
The company's current management will remain in place, and daily operations will continue.
"It's business as usual at Source Interlink," Mays added.
Source's business partners reportedly support the restructuring. "We at Curtis embrace the fact Source got out in front of this," said Bob Castardi, president of Curtis Circulation Co., in the statement.
Castardi said the reorganization will reduce any concerns going forward as to Source Interlink's financial stability.
"When Source presented their reorganization plan in detail, we were very relieved to understand the huge debt write-off," said Michael Sullivan, CEO of CMG, a national distributor of Source. "This will allow CMG to move forward with new initiatives knowing that Source Interlink Companies will be in a very favorable financial position."