The UK arm of Reader’s Digest magazine has been rescued from administration, it was reported today.
Moore Stephens – appointed after the 72-year-old British edition of the magazine went into administration earlier this year – is expected to announce that private equity group Better Capital has taken on the business.
Better Capital, set up by private equity veteran Jon Moulton, was one of a host of interested bidders for Reader’s Digest UK.
The staple magazine of dentists’ waiting rooms called in administrators on February 17 when its embattled US parent Reader’s Digest Association (RDA) said it was no longer able to support it following a crisis in its pension fund, which had a £125 million deficit.
The UK title has maintained its publishing schedule throughout the administration.
According to the Financial Times website, the deal with Better Capital involved tense negotiations to ensure that the private equity firm bought the rights to the Reader’s Digest brand, which was still owned by its US parent.
Reader’s Digest UK employs more than 100 staff and the magazine has a circulation of more than 465,000. But circulation has plunged in recent years – down from more than two million in the UK at one stage.
Its US parent also hit hard times after embarking on a highly leveraged 2.8 billion US dollar (£1.9 billion) buyout deal that was backed by private equity.
The US firm filed for bankruptcy protection last August after battling financial difficulties as it laboured under vast interest payments on a 2.2 billion US dollar debt pile (£1.4 billion).
Putting the UK title into administration allowed the wider group to plough on with its financial restructuring and RDA has since emerged from Chapter 11 protection.
Its other titles across the world – including some 50 editions of the pocket-sized magazine – were not affected by the UK administration.