The US publisher of Reader’s Digest magazine has filed for Chapter 11 bankruptcy as part of a restructuring plan to help it reduce its 2.2bn (£1.35bn) debt by around 75 per cent.
The deal, which it has agreed with its lenders, comes as it struggles against a weakened advertising market.
The move will apply only at its US businesses and the American edition of the magazine will continue to be published.
Operations elsewhere will not be affected. The company’s international editions were said to have “adequate funding” to continue publishing.
Reader’s Digest Association said yesterday the deal would allow it to reduce its overall debt from $2.2bn to $550m.
Under the deal, Reader’s Digest has agreed to swap a large proportion of its debt for equity some of its lenders have also agreed to inject around $150m to see it through a restructuring while in bankruptcy protection.
Annual interest payments on remaining debt will also be reduced to less than $80m, from about $145m.