DELAYING THE INEVITABLE?: American Media Inc. is back in the headlines, but this time around it has nothing to do with the National Enquirer or John Edwards. The company issued a statement Wednesday, following a report in the New York Post, saying it is potentially refinancing its notes and giving bondholders the possibility of warrants in the company’s stock, which could represent 20 percent of AMI’s outstanding shares. In essence, AMI and its chief executive officer, David Pecker, are buying time — two more years, to be exact — to right the ship and improve operating results. The refinancing incorporates a combination of $250 million of senior notes due in 2013, $15.9 million of special senior subordinated discount notes due in 2013 and up to $340 million of mandatory, convertible senior subordinated discount notes, also set to mature in 2013. The company reported that 32.6 percent of bondholders in one class support the plan, while 51 percent of another class is behind it. AMI has set a deadline of Sept. 25 for the offer.
AMI has $400 million worth of bonds set to mature on May 1 and the clock was ticking on a decision — bondholders weren’t holding their breath, but they expected something to happen by the end of September, at the earliest. The statement Wednesday from AMI came as a surprise to some on Wall Street — bonds for one of the publisher’s $150 million notes, due in 2011, had not traded since June 23 and there has been no trading on the soon-to-mature $400 million notes since Aug. 6. According to one analyst, it’s a quiet time of year, but he expected there would have been some activity in the notes, given the importance of the announcement.
Earlier this month, AMI reported first-quarter net profits of $388,000, compared with a net loss of $123,000 in the same period a year ago. Revenues were down 2 percent to $119 million and Pecker said AMI’s ad pages were down 3.2 percent from Jan. 1 through July 31, claiming it was the smallest decline of any publisher with more than 3,000 ad pages.
— Amy Wicks