Ziff Davis Media Files Bankruptcy To Fix Capital Structure
Ziff Davis Media filed for Chapter 11 bankruptcy because it had, as of December 31 or so, $500 million in liabilities and $313 million worth of assets. The culprit that set up this imbalance is no surprise for anyone who has been following the industry – falling revenue from print ads and dropping subscription rates. Last year, it pulled in just $40 million in ad revenue. In 2001, its ad revenue was $215 million. So, now what happens?
First off, Chapter 11 isn’t Chapter 7, which would
effective liquidate the company. It
will continue to operate, and the company’s creditors have set aside around $25
million to ensure that it can keep operating while this whole process is
underway. However, it is bankruptcy,
which means that current stockholders now possess stock certificates that aren’t
worth the paper they’re printed on.
The court papers say that Willis Stein & Partners LP and affiliated funds, based
in
Instead, the debt holders are the beneficiaries of this process. Right now, the senior debt (first-in-line to be repaid) amounts to $225 million. The holders of that debt have agreed to swap that for $57.5 million of senior secured (that is, backed by specific assets) and at least 88.8% of the stock in the post-Chapter 11 Ziff Davis.
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