Is The Auto Industry Killing Maxim?

By Becki Heller Comment

maximla6.jpgWhen we think of Maxim the first two things that pop into our minds are probably babes and cars. So wouldn’t it be fitting that the demise of one of those things maybe bringing down the entire magazine empire that runs Maxim? Keith Kelly explains this twisted tale of company turmoil.

Alpha Media was formed when Quadrangle Media, headed by Steven Rattner and Peter Ezersky, bought Maxim, Blender and Stuff from Felix Dennis in August 2007 for about $245 million…

But things did not go according to plan. By the fall of 2008, Quadrangle had defaulted on loans when the company’s profit dropped from $28 million in 2007 to under $8 million last year. Cerberus Capital Management, which led the banking group that loaned Quadrangle $125 million to complete the deal, called for Quadrangle to put in more cash to bring the company’s cash flow in line with the loan requirements…

On paper, Quadrangle remains in control of the board, but as part of restructuring talks, Cerberus is expected to swap its debt for equity, and become the new owner…

In the midst of all this, Rattner abruptly resigned from Quadrangle, where its media holdings were winding down, to serve as a special adviser on the auto industry to Treasury Secretary Timothy Geithner, heading a task force guiding the White House on how to restructure the US auto industry.

Oddly, having played hardball with Cerberus after defaulting on the loan at Alpha Media, Rattner’s now in a position to influence the outcome of one of Cerberus’ investments, Chrysler Corp.

What goes around comes around might be the name of the game here. Of course in this world of global investments, aren’t all companies really interconnected? Cerberus should have a great time traversing the sinuous road of print publishing now.