Source: Company Press Release
 
The Reader's Digest Association, Inc. ("RDA") announced today that it has successfully completed its financial restructuring and has emerged from pre-arranged Chapter 11 well capitalized, having reduced its debt by 75 percent and lowered its gross operating leverage from 17.5x to 3.2x. With a significantly improved capital structure, RDA is positioned to continue its transformation into a multi-platform, multi-brand media and marketing company that educates, entertains and connects 130 million people around the world.
 
"This is a very important day for our company, and emerging with a de-levered balance sheet and a strong new capital structure is a significant step forward as we continue to transform RDA into a global media and marketing leader," said Mary Berner, President and Chief Executive Officer. "My sincere thanks go to our employees around the world for their hard work and resilience, and for staying focused and resolutely on plan throughout an incredibly challenging time. In addition, I want to thank our strategic partners and suppliers for your unwavering support in assisting the company in the delivery of products and services to our customers, which played a vital role in our successful restructuring."
 
With the restructuring complete, RDA is focusing on driving top-line growth and transformation of its business through its affinity marketing model, which builds communities of like-minded consumers around its brands, reaching them in person, print, and online.
 
"The new company is committed to maximizing value creation. Having strengthened our balance sheet and capital structure and having successfully monetized underperforming assets, RDA is focused on free cash flow and return on investment," Berner said. "We expect that the industry and competitive environment will continue to be demanding, but we have the right team, the right model and relevant brands that engage today's consumer."
 
Tom Williams, Senior Vice President and Chief Financial Officer, said: "The new RDA is focused on maximizing cash EBITDA and ROI. We are targeting improved performance through continued supply chain and other cost initiatives, expanded use of digital content and promotional channels to reduce customer acquisition costs, centralization of services, and revenue growth through integrated product and service offerings."
 
The company has $525 million in exit financing as a result of a recently completed bond refinancing that will provide the company with an estimated $30 million in cash interest expense savings annually compared with the credit facility it had pre-arranged at the start of the restructuring process. Moody's Investors Service assigned RDA and the company's exit financing a B1 Corporate Family Rating (with Stable outlook), and Standard & Poor's issued a B rating to the company's exit financing. The company also has access to an additional $50 million of revolver credit.