Reader's Digest Seeks Relief

  • 22 Jun 2003
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Reader's Digest is in the process of negotiating a covenant change on its credit facility, said a company spokesman. Reader's Digest acquired Reiman Publications for $760 million in cash in the fourth quarter of fiscal 2002 and the Pleasantville, N.Y.-based company financed the deal with bank debt. J.P. Morgan and Goldman Sachs lead the loan that includes a $600 million "B" piece. Debt levels reached as high as $950 million, said the spokesman.

The credit facility includes a covenant stating that Reader's Digest must maintain a debt-to-EBITDA ratio of four times, but at the end of the third quarter of fiscal year, the company's debt-to-EBITDA ratio was five times due to a charge against earnings, he explained. Reader's Digest is exceeding payment schedules and debt requirements, but is seeking covenant relief from its lenders, he noted.

 

  • 22 Jun 2003

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1 BNP Paribas 13,295 25 18.56
2 Bank of America Merrill Lynch (BAML) 8,059 25 11.25
3 Lloyds Bank 6,979 21 9.74
4 Citi 6,256 16 8.73
5 JP Morgan 5,220 8 7.29

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