Ziff Davis files plan of reorganization; senior secured noteholders to receive new notes, cash, stock

By Caroline Salls

Pittsburgh, March 26 - Ziff Davis Media Inc. filed its plan of reorganization and related disclosure statement Wednesday in the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, the company made a pre-packaged Chapter 11 bankruptcy filing on March 5 under a debt restructuring agreement with an informal group of holders of more than 80% of its senior secured floating-rate notes.

Specifically, the company's senior secured debt, including the senior secured notes, will be exchanged for $50 million in new three-year senior secured notes, which could be increased to up to $57.5 million, plus cash and at least 88.8% of the common stock in the reorganized company.

In addition, 11.2% of the reorganized company's common stock will be distributed to holders of Ziff Davis' subordinated unsecured notes if they vote to approve the plan.

General unsecured creditors will receive their share of $500,000 in cash.

Treatment of creditors under the plan will include:

• Holders of administrative claims, less than $100,000 in miscellaneous priority claims and less than $100,000 in priority tax claims will recover 100% in cash;

• Holders of less than $100,000 in miscellaneous secured claims will recover 100% either in cash, reinstatement of their claims or return of the collateral securing the claims;

• Holders of subsidiary interests will retain their interests;

• Holders of an estimated $242 million in senior secured note claims will receive their share of new senior secured notes, their share of cash, 88.8% of the new common stock of the reorganized company and their share of an indemnity escrow;

• Holders of $186 million in subordinated note claims will receive 11.2% of the new common stock of the reorganized company.

If these creditors vote to accept the plan, subordination rights will be waived. If they vote to reject the plan, subordination rights will be enforced and their stock will be turned over for distribution to senior noteholders;

• Holders of $12.5 million in general unsecured claims will recover 5% through their share of $500,000 in cash;

• Holders of $500,000 in convenience claims of $10,000 or less will recover 100% in cash; and

• Holders of old Ziff Davis Holdings common stock and interest will receive no distribution under the plan.

The bankruptcy court is expected to schedule the disclosure statement approval hearing Thursday.

Ziff Davis, a New York-based integrated media company focused on the technology and video game markets, filed for bankruptcy on March 5. Its Chapter 11 case number is 08-10768.

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