Source Interlink goes C11
Source Interlink Files for Bankruptcy
Nearly $1 billion in debt, distributor agrees to go private.
By Dylan Stableford
04/28/2009
Magazine distributor and publisher Source Interlink is filing for bankruptcy—and going private.
The company—controlled by billionaire Ron Burkle’s Yucaipa Cos.—announced today that it has reached an agreement with its lenders to “eliminate approximately $1 billion dollars of existing debt” and privatize the company.
At yesterday’s market close, Source stock was trading at 16 cents per share. (In August 2007, when Source acquired the Primedia Enthusiast Group, its stock was upwards of $4 per share. A year earlier, it was above $10 per share.)
Under terms of the agreement, the company’s lenders will cancel nearly $1 billion of the Source’s debt, as well as funnel $100 million in additional liquidity. Source, in turn, has agreed to pay “all of its vendors in full and on time.”
As part of the restructuring, the company filed a lender-approved plan of reorganization under Chapter 11 in the U.S. Bankruptcy Court.
“We couldn’t be more pleased,” Source Interlink CEO Greg Mays said in a statement. “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.”
Mays said he anticipates Source will emerge from bankruptcy within 35 days.
Earlier this year, Source was at the center of a massive magazine distribution lawsuit, claiming rival wholesalers as well as publishers—like Time Inc., Hachette and American Media Inc.—were attempting to force the company out of business.
The company eventually settled with most of the defendants (Bauer is the lone defendant remaining in the lawsuit).
This is only two weeks after they settled with our distributor, Curtis Circulation…
Source Settles with Hachette, Curtis, Kable
Bauer is last defendant remaining in wholesaler’s antitrust lawsuit.
By Jason Fell
04/14/2009
Source Interlink has announced agreements with Hachette, Curtis Circulation and Kable Distribution, effectively ending its lawsuit against the companies.
In February, Source filed a lawsuit alleging that several defendants—including magazine publishers, wholesalers and distributors—“conspired” to force the company to sell its distribution business at a steep discount to rivals Hudson News and News Group. Source was awarded a temporary restraining order prohibiting the defendants from denying shipments to its magazine distribution business.
Source has come to similar agreements with Time Inc., Time Warner Retail, News Group, Hudson News, American Media Inc. and its distribution unit Distribution Services Inc.
“I am happy to make this announcement because it means that, when considered in light of other recent agreements, we have resolved our differences with virtually all our magazine suppliers,” Source CEO Greg Mays said in a statement.
Bauer remains the only defendant not to strike a deal with Source.
Last month, fellow wholesaler Anderson News, which went out of business in February, filed its own antitrust lawsuit against many of the same publishers and distributors.
“It is fully our intention to create a bond with our publishers and national distributors that is as strong as the relationship we have with our retail partners,” Mays said.