NEW YORK (Reuters) – American Media said Sunday it reached a deal with its bondholders that leaves them with a 95 percent stake in the company and reduces its debt load by $227.2 million.
American Media, the publisher of the tabloids The National Enquirer and Star, and Men’s Fitness magazine, said in a statement the refinancing affected about $570 million of its debt.
American Media’s Chief Financial Officer Dean Durbin could not be reached for comment Sunday.
The company had been seeking to exchange that debt, which was maturing in 2009 and 2011, for mandatorily convertible securities due 2013, and stock warrants, to avoid the risk of default.
American Media had until Sunday to refinance at least $389.5 million of its debt.
Its shareholders include private equity firms Evercore Partners (EVR.N) and Thomas H. Lee Partners.
According to a New York Post report, the deal will wipe out Evercore’s $200 million investment, while Thomas H. Lee Partners will lose $300 million.
Evercore and Thomas H. Lee Partners could not be reached for comment Sunday.
The Boca Raton, Florida-based American Media has been hit hard by a decline in ad sales and burdened by more than $1 billion of debt.
The company missed a Nov. 1 interest payment on its notes, and in January agency S&P downgraded its rating on American Media’s 2011 debt.
American Media’s owners now include Angelo Gordon, Avenue Capital Management II Ltd, American High Income Trust, Credit Suisse LLC, and Regiment Capital, the Post reported. (Reporting by Phil Wahba; Editing by Steve Orlofsky)