AMI, which publishes Star and Shape, sought bankruptcy protection in November after being hurt by the ad recession and lower consumer spending for its titles.
The U.S. Bankruptcy Court for the Southern District of New York approved its prepackaged plan, enabling AMI to secure new financing; reduce its debt by $355 million to $500 million; and improve its cash flow. The company expects to emerge from bankruptcy by year’s end, 32 days after filing.
The outcome also seems to deal a vote of confidence to David Pecker, chairman, president and CEO of AMI, who emerges with a long-term contract from AMI’s principal shareholders Avenue Capital, Angelo Gordon and Capital Research.
The publisher still faces a challenging newsstand market for its tabloids, rising paper costs and an uncertain outlook for print ad spending.
But Pecker hopes to grow the business by striking new outsourcing partnerships like the deal he struck with Playboy to handle its business operations, saying AMI has “the best capital structure” he’s ever had.
“This will allow AMI to finally capitalize on all the digital opportunities available for our brands, continue to strengthen our print properties, expand our publishing services efforts and ultimately accomplish what my goal has always been—to build a major media company that will be among the industry’s elite,” he said.
There aren’t many properties on the market yet, though, and his new banker bosses are likely to take a dim view of deals.
One potential deal opportunity is the anticipated sale of Hachette Filipacchi Media U.S. (where Pecker used to be CEO). It could put in play Hachette’s Car and Driver and Road & Track, which could be a logical fit with AMI’s men’s magazine group.