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Chriss Scherer Scherer has been the editor of Radio magazine since 1997. His experience in radio includes work as chief engineer at stations in Cleveland (WMMS-FM, WHK-AM, WZJM-FM, WJMO-AM...more

Archive for February 16th, 2010

A pre-packaged chapter 11

I have received several inquiries about the Chapter 11 filing made by Penton Media, the company that owns Radio magazine. For a company to file Chapter 11 raises thoughts of doom and gloom to most people. In this case, Chapter 11 is only part of the story. What was filed was a pre-packaged Chapter 11.

During the past year, Penton’s management team and board of directors focused on strengthening the company financially and operationally as part of its commitment to making sure we are best positioned to meet the needs of our customers when the economy turns.

We have made solid progress, which has allowed us to remain profitable. However, Penton still faces the burden of a heavy debt load at a time when difficult economic conditions are putting pressure on the entire industry. This debt is simply not sustainable. As a result, Penton proactively engaged in discussions with our current owners and lenders, and we reached an agreement on a capital restructuring that will strengthen our balance sheet and significantly improve our financial position. Once it is implemented, the restructuring will result in:

  • eliminating $270 million of the company’s debt;
  • our owners making an additional investment in Penton which we will be able to use to improve and grow our business; and
  • an extension of the maturity on Penton’s senior secured credit facility through 2014.

    Together with the company’s lenders, Penton agreed that the best way to implement this restructuring agreement is through what is called a “pre-packaged” Chapter 11, which means we have already finalized a plan of reorganization that has been approved by our lenders. The plan has been filed with the court, and it should be a very quick process. We expect the plan to be approved by the court within 30 to 45 days.

    The most important item to note is that Penton Media is not going out of business. In fact, the company has been and continues to be profitable. This is simply a capital restructuring under Chapter 11, an action that will be taken voluntarily because it will make the entire Penton organization more financially stable.

    It is equally important for you to know that during the restructuring process it will be business as usual. The entire organization remains committed to providing the trusted print publication, website and digital products that you rely on. There is no change to our readers or advertisers. There is no change to the Radio magazine staff either.

    I appreciate the notes of concern I have received, but it’s still business as usual for us.

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