PLEASANTVILLE, N.Y., Sept. 2 /PRNewswire/ -- Moody's Investors Service tonight assigned a Ba1 rating to The Reader's Digest Association, Inc.'s $150 million Debtor-in-Possession term loan facility provided by lenders as part of RDA's planned restructuring to reduce debt and financially strengthen the company for the future.
Tom Williams, Senior Vice President and Chief Financial Officer for RDA, said the rating for the DIP facility was nine steps higher than Moody's most recent rating for the company, four steps higher than when the company was acquired and taken private in March 2007, and equal to the prior, public-company levels circa 2005.
"We are encouraged by the Moody's assessment of our DIP loan as a Ba1 rating, which is the highest level of speculative grade debt," Williams said.
Moody's said in a press release: "Moody's believes RDA has a relatively high probability of executing its restructuring plan based on nearly 80 percent of its lenders having signed an agreement in principle to approve the proposed reorganization. The agreement is likely to shorten the stay in bankruptcy and minimize any potential adverse operational effects."
On August 24, RDA announced it had filed voluntary pre-arranged petitions under Chapter 11 of the United State Bankruptcy Code, as part of the company's previously announced restructuring plan.
RDA is a global multi-brand media and marketing company that educates, entertains and connects audiences around the world. The company builds multi-platform communities based on branded content. With offices in 44 countries, it markets books, magazines, and music, video and educational products reaching a customer base of 130 million in 78 countries. It publishes 94 magazines, including 50 editions of Reader's Digest, the world's largest-circulation magazine, operates 65 branded websites generating 22 million unique visitors per month, and sells approximately 40 million books, music and video products across the world each year. Its global headquarters are in Pleasantville, N.Y.
Forward-looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the Federal securities laws, including statements regarding anticipated financial results, plans and strategies and liquidity. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from anticipated results, including but not limited to: the potential adverse impact of any chapter 11 bankruptcy filing on the Company's business, financial condition or results of operations, including the Company's ability to maintain contracts, trade credit and other customer and vendor relationships that are critical to its business and the actions and decisions of the Company's creditors and other third parties with interests in any chapter 11 proceedings; the ability of the Company to secure additional support from its secured lenders and noteholders for its proposed restructuring plan; general economic conditions in the markets in which the Company operates, including changes in interest rates or currency exchange rates, the financial condition of the Company's customers or suppliers; changes in the demand for our products from the Company's current estimates; the loss of business with respect to, or the lack of commercial success of, our products; the Company's ability to achieve cost reductions; the costs, timing and success of restructuring actions; risks associated with conducting business in foreign countries; competitive conditions impacting the Company's customers and suppliers; the cost and availability of raw materials; the outcome of legal or regulatory proceedings to which the Company is or may become a party; unanticipated changes in cash flow; further impairment charges initiated by adverse industry or market developments; and other risks described from time to time in the Company's filings with the Securities and Exchange Commission. Many of these factors are beyond the Company's ability to control or predict. Future operating results will be based on various factors, including actual consumer demand for the Company's products and the Company's success in implementing its operating strategies. The forward-looking statements in this press release are made as of the date hereof, and the Company does not assume any obligation to update, amend, supplement or clarify them to reflect future events, new information or circumstances occurring after the date hereof. For forward-looking statements in this news release, the company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
