Business

BANKS OK TO READER’S DIGEST DEBT PLAN

MORE banks have OK’d Read er’s Digest Association’s plan to take the company into a pre-packaged Chapter 11 filing, even though it means they’ll take close to a $1 billion haircut in exchange for a controlling share of the company.

RDA said yesterday that nearly 80 percent of its secured lenders, led by JPMorgan Chase, signed onto the deal, which will slice the company’s total debt load from $2.2 billion to $550 million plus a $150 million credit line.

Not yet clear is how bondholders will react.

Bondholders, who originally put up $600 million of the original $2.4 billion purchase price when Ripplewood Holdings took RDA over in 2007, will be left with nothing, according to the preliminary plans outlined by Reader’s Digest CEO Mary Berner earlier this week.

“If they are not giving them anything, you can count on bondholders to object,” predicted Stephanie Wickouski, a bankruptcy lawyer at Drinker Biddle & Reath who has handled bondholders in other cases but is not involved in RDA.

She also said that since Berner was the only person from the old Ripplewood-backed board who has been re-appointed to a new board of directors, it suggests she will survive once the formal bankruptcy filing is in place.

Unhappy bondholders, fearful that they were about to lose it all, had already hired Ken Moelis as an adviser weeks earlier, but the negotiations so far haven’t paid off.

The bondholders were to have been paid a $27 million semi-annual interest payment on Aug. 17 when RDA instead skipped the payment and announced its bankruptcy plan.

Moelis did not return several calls seeking comment.

New home

In one of the more bizarre twists in the publishing world, Time Inc. Editor-in-Chief John Huey has guided his company into purchasing a house in Detroit to host a team of reporters and editors.

The Detroit Free Press broke the story that Time Inc. had paid $99,000 for the house. After a year, Time Inc. said it will donate the house to a charity.

While the house is going to be strictly for use by editors and writers covering the city, the company yesterday said it is looking for advertisers or a sponsor to help underwrite the cost of the project.

Media Ink hears that they are very close to landing two or three sponsors.

Not payin’

Star Magazine may decide to stay out of politics for a while.

Its cover story last week, detail ing what it claimed was the pending divorce of former Alaska Gov. Sarah Palin, was apparently something of a disappointment on newsstands.

Sources said it sold some where in the 580,000 to low 600,000 range. In a good week, Star sells in the high-600,000 range. keith.kelly@nypost.com