American Media gets $227 million debt reduction for 95% ownership, wraps 10¼%, 8 7/8% notes tender

By Susanna Moon

Chicago, Feb. 2 - American Media, Inc. said it closed on its proposed deal with bondholders to reduce debt by $227 million in exchange for 95% ownership of the company.

American Media said it completed its financial restructuring with the conclusion of the cash tender offers for its outstanding senior subordinated notes and receipt of required consents in the related consent solicitations for $414.54 million principal amount of 10¼% series B senior subordinated notes due 2009 and $155.45 million principal amount of 8 7/8% senior subordinated notes due 2011.

The tender offers and consent solicitations expired at 8 a.m. ET on Jan. 29.

Holders tendered 96.6% of the 10¼% notes and 95.2% of 8 7/8% notes.

The total payment was $807.56 for each $1,000 principal amount of the 10¼% notes and $756.32 for each $1,000 principal amount of the 8 7/8% notes.

The company was soliciting consents to eliminate substantially all of the restrictive covenants, some events of default and other related provisions in the indentures governing the notes.

The company also completed its private placement of $21.25 million of 9% senior pay-in-kind notes due 2013 and $300 million of 14% senior subordinated notes due 2013.

American Media's principal owners will now be Angelo, Gordon & Co., Avenue Capital Management II Ltd., American High Income Trust, Credit Suisse Securities LLC and Regiment Capital Ltd.

The principals assembled a new board of directors with media expertise and asked David J. Pecker to continue in his role as chairman of the board, as well as president and chief executive officer.

"As a result of this transaction, we now have the capital structure in place to strategically, financially and operationally fully realize the potential of our brands as the leaders in both the celebrity and health and fitness categories," Pecker said in a press release. "It gives us the flexibility and freedom we need to move the company forward."

"This is a new beginning for American Media," Pecker said. "Going forward, we should now be recognized for what we accomplish with the spotlight trained not on our finances, but on our future."

American Media is a Boca Raton, Fla., magazine publisher.

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