Source Interlink Cos., publisher of Motor Trend, Automobile and Hot Rod, is expected to file for a pre-packaged Chapter 11 bankruptcy today, which will remove Ron Burkle’s Yucaipa Cos. as a shareholder and allow the company to get out from under nearly $1 billion of its $1.5 billion debt load in a debt-for-equity swap.
Citigroup is the lead banker, which will now become the biggest shareholder with about 80 percent of the equity in a new privately held company.
The pre-packaged Chapter 11 is expected to write off about $900 million in debt owed to a consortium of banks led by Citi.
Most of the debt was tied to Source’s $1.2 billion acquistion of Primedia’s enthusiast media division in May 2007, when Source shares were at $5.89.
Burkle’s Yucaipa owns about 48 percent of Source.
Source fell 2 cents to 16 cents.