American Media Inc. creditors have thrown the cash-strapped proprietor of this National Enquirer, US Weekly and OK! A financial lifeline to allow it to endure a sales slump caused by the coronavirus pandemic, Media Ink has heard.
Some 90 percentage of AMI’s second-lien bondholders, who maintain an estimated $225 million of their publisher approximately $400 million total debt, have consented to waive their in-state interest payments before their bonds grow in 2023, sources said.
The price provides the struggling author — famous for the sordid feud with Amazon CEO Jeff Bezos — some breathing space by decreasing its own $ 36 million yearly interest payments by about $20 million annually, sources said.
“This means they’ll essentially get to jump approximately $10 million in cash payments [at the end of June], cash that they do not possess,” said a source with knowledge of the organization’s operations.
The coronavirus pandemic has defeated the publishing business by squashing newsstand and advertising revenues. AMI, conducted by Donald Trump pal David Pecker, is based heavily on earnings from newsstand sales for the majority of its earnings. And though the supermarkets and drugstores that take its star and physical fitness titles have mostly stayed open throughout the lockdowns, newsstand sales have dropped as more consumers turned to Amazon and other internet retailers to get much more of their shopping requirements.
The refinancing inquires that creditors give up their second-lien bonds to what is called payment-in-kind, or PIK bonds. Resources stated that the move was voluntary and just 90 percentage of creditors agreed to perform it, such as Anthony Melchiorre-led hedge fund Chatham Asset Management, that is also the writer’s majority stockholder, using an 80 percent bet.
American Media will gradually cover these bondholders back in a 13 percentage interest rate, over the present speed of 10.5 percentage, 1 investor source stated, though a source near Chatham contested this expression that the speed has come down to nearer to 10 percent.
Resources state Chatham possesses 40 percent to 50 percentage of their whole second-lien bonds outstanding, all which will be redeemed for PIK bonds.
Hedge fund director Leon Cooperman, whose Omega Partners possesses less than 10 percentage of AMI’s inventory, did not agree to go together with the swap because his AMI bonds have been utilized to finance his charitable causes, sources said.
American Media could have been better placed to resist the pandemic had its own $ 100 million agreement to market the National Enquirer closed until the coronavirus catastrophe destroyed its earnings.
The organization agreed to market the Enquirer and many smaller supermarket tabloids in April 2019 into James Cohen, who runs the magazine wholesale distributor Hudson News. However, the bargain was stuck in limbo for more than a year now, despite Cohen’s insistence that it is on track .
Even prior to its economy to Cohen, AMI was struggling to increase money, such as a refinancing 18 weeks past that helped it extend its payments on roughly $460 million in long-term debt. Back in February, the business raised countless pare down some of the cash by promoting its bodybuilding trade series, Mr. Olympia, and bodybuilding publications Muscle & Fitness, Flex and Muscle & Fitness Hers into an Arizona businessman. Terms weren’t disclosed, but sources at the time stated the sale increased 70 million.
After the pandemic struck in March, the business slashed salaries by 23 percentage. Back in April it laid off a lot of its RadarOnline digital performance — a joint venture together with Ron Burkle’s Yucaipa Cos.. It’s axed staff in other electronic surgeries and more recently laid off roughly six individuals at its Boca Raton, Fla., headquarters, which currently employs about 35 individuals.
Rumors lately swirled that the corporation might make even deeper cuts and shut to the Florida office, however AMI simplifies this. “Absolutely not true,” said a spokesman.
The spokesman declined to comment on the bond restructuring besides to state,”All bond rates are created and will be forced ” Chatham and Cooperman’s hedge fund also declined to comment.
American Media Inc. made headlines last year after Bezos, the wealthiest man on the planet, accused the Pecker-run firm of attempted extortion for utilizing personal selfies shared between Bezos and his girlfriend, Lauren Sanchez. Bezos said AMI executives threatened to print the photographs unless he issued a statement disavowing the publication’s reporting was”politically inspired or influenced by political powers.”