American Media redeems 13½% notes, wraps exchange for 11½% notes

By Marisa Wong

Morgantown, W.Va., March 22 – American Media, Inc. redeemed all of its outstanding 13½% second-lien senior secured notes due 2018 on March 18, according to an 8-K filing with the Securities and Exchange Commission.

The outstanding 13½% second-lien notes were canceled, and the collateral agreement securing those notes was terminated.

According to the 8-K, American Media also issued about $159.5 million of 7% second-lien notes on Monday.

The company issued about $76 million of 7% second-lien senior secured notes due 2020 in exchange for roughly $58.9 million of its 11½% first-lien senior secured notes due 2017, $76.2 million of 7% second-lien notes in a distribution to holders of equity interests in the company’s direct parent and about $7.3 million of 7% notes to a holder of equity interests in the company’s direct parent.

The company canceled the first-lien notes exchanged for second-lien notes. The transactions resulted in a decrease of first-lien notes to about $213 million and an increase of 7% second-lien notes to about $191 million, according to a Monday press release.

The company announced the exchange earlier this month in an effort to reduce the first-lien notes, “while improving the company’s capital structure and its ability to refinance these notes later this year,” according to a prior press release.

The transactions were conditioned on lender approval, as previously reported.

On March 18, American Media amended its revolving credit agreement dated Dec. 22, 2010 to modify some provisions permitting the issuance of the additional second-lien notes.

In addition, the company obtained consents from a majority of the holders of its first-lien notes to amend the indenture governing those notes as of March 17.

The consent solicitation, launched on March 15, remains open to noteholders until 5 p.m. ET on March 28. Holders who deliver their consents by the deadline will receive a cash consideration equal to 1% of the principal amount of the notes for which consents have been delivered.

On March 18, the company also received consents from all of the holders of its 7% second-lien notes to amend the indenture governing those notes. No consent fee was paid to holders of the 7% second-lien notes.

American Media is a New York-based magazine publisher.

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