Better Capital Buys Reader’s Digest UK

LONDON (Reuters) – Jon Moulton’s Better Capital (BCAP.L) on Friday said it had bought the UK arm of Reader’s Digest from its administrator, securing the future of a monthly magazine sent to nearly 500,000 readers. The private-equity firm said on Friday it had bought the business, which also sells books and CDs and runs a prize draw, from administrators Moore Stephens LLP in a deal that will see its existing management take a 35 percent stake.

Better Capital said it would commit 13 million pounds ($20 million) for the transaction and to fund future growth at the publication, which made an operating loss of 1 million pounds on revenue of 85 million pounds in the year to end-June 2008.

The company filed for administration in February after regulators refused to approve a plan to rescue its pension fund. 

Its U.S. parent, Reader’s Digest Association Inc., has also run into difficulties, due to its $2.3 billion debt pile, but emerged from bankruptcy in February after cutting the deficit by 75 percent. 

RDA said in a statement it had reached a licensing agreement with the new owners, which would ensure a long-term existence in the UK for the brand.

Moulton, who bought aerospace components supplier Gardner Group in February, said last month that around a third of the deals he was considering were companies burdened by pension deficits.

(Reporting by Paul Sandle)