Buyout-Backed Busts: Reader’s Digest

#6. Reader’s Digest Association

A consortium led by Ripplewood Holdings purchased the Pleasantville, N.Y.-based periodical publisher in 2007 for $2.4 billion. The firm invested at least $375 million in equity to the deal from Ripplewood Partners II LP.

What Went Wrong?
The company saw readership of its namesake publication decline by half as the demand for generalist print media declined. The company has declining revenue at the time of the deal and net loss continued to increase. The company eventually crumbled under its $2.2 billion debut load, filing for bankruptcy on August 24, 2009.

The Aftermath
Ripplewood relinquished ownership to a steering committee led by JPMorgan Chase & Co. The committee also includes Ares Management LLC, Eaton Vance, GE Capital and Regiment Capital. In August the company won permillion to tap a $150 DIP loan.