American Media Inc., the publisher of the National Enquirer, is about to file for bankruptcy.
AMI is expected to file for Chapter 11 in the next two weeks, David Pecker, the company’s chief executive, confirmed in an e-mail to TheWrap. (The story was first reported by Keith Kelly in the New York Post.) AMI owes its creditors about $355 million.
Pecker hopes AMI can emerge from bankruptcy protection within 60 days after the filing.
"Our ultimate goal when we began working with our bondholders last spring was to fix our balance sheet, which this accomplishes,” Pecker told the Post. “So while I am satisfied that the end does justify the means in this case, it's not the action the vast majority of the bondholders or I would have preferred."
Apparently one of AMI’s bondholders pushed for bankruptcy, despite Pecker’s plans for a debt-for-equity swap. But even under the forthcoming bankruptcy plan, the bondholders -- including Avenue Capital Management, Angelo Gordon & Co. and Capital Research -- will own 95 percent of the company.
In February 2009, AMI was able to cut its then $1.1 billion debt down to about $855 million.
Pecker said that Radar, which AMI also owns, will not be part of the expected bankruptcy filing.
