A group of American Media’s creditors have voiced concern over CEO David Pecker’s new restructuring package and want the struggling publisher to sweeten the terms before they support the deal, The Post has learned.
The bondholders, who own a portion of American Media’s junk bonds, want the company’s private-equity owners to give them a larger take in return for retiring some of its debt, according to sources close to several bondholders.
Last week, the publisher of the National Enquirer and Star magazine announced a $570 million cash tender offer that would save it from entering bankruptcy court in February, when it faces a cash crunch as a big portion of its debt comes due.
The complex deal would exchange American Media’s current debt for new bonds that don’t have to be paid off until 2013 and giving creditors warrants to buy up to a 20 percent stake in the company.
American Media has already secured backing from more than 50 percent of one series of bondholders and over 33 percent of another. Sources close to the company said they have received more support for the deal since it was announced.
But others are still holding out for sweeter terms. “The deal they proposed is basically kicking the can forward,” said one fixed-income analyst.
“If you’re a bondholder here, you’re basically being asked to extend the debt claim, leave control of the company in the hands of the people that essentially screwed it up in exchange for a new security that is not that much different than the one you started with plus 20 percent of the company.”
Industry publication Debtwire reported yesterday that two big American Media bondholders, Avenue Capital and Angelo Gordon, recently hired powerful Wall Street law firm Akin Gump Straus Hauer & Feld as they gear up for a protracted fight with the company.
The deal “buys the company more time and they have to do something now,” said John Page, a senior analyst with Moody’s. “But the company’s total debt will remain the same.”
The company has set a Sept. 25 deadline for the tender offer, but could push that date out later. zachery.kouwe@nypost.com