American Media "Terminates" CFO as Financial Restatement Deadline Looms

Another chief financial officer has come and gone at debt burdened-American Media Inc. and another brave man has stepped in to take his place. The publisher of Star and the National Enquirer announced this week it has hired John Craven to serve as its new executive vice president and chief financial officer. A former executive VP and CFO at Time Inc.'s Retail Marketing and Sales Division, Craven, 56, replaces Carlos Abaunza, who will stay on as a consultant with AMI for three months.

In an 8K filed this week by AMI, the company said it "terminated the employment" of Abraunza, who joined the company in January of this year. Craven, the fourth CFO the company has had since 2004, joins American Media a little less than two months before its financial restatements are due to its note holders. The company, which is almost a billion dollars in debt, twice put off the filing the restatements this summer. Note holders extended the deadline for the company's restatements last month to Oct. 31 - in return for a 1/8-point interest-rate hike. In June, the company offered note holders $5.5 million in exchange for the initial postponement.

Craven will be paid an annual salary $400,000 and will be eligible for an up to $200,000 bonus. He also will be paid monthly living allowance of $3,000 and a one-time relocation allowance of $30,000. And he'll have his work cut out for him.

In addition to the filing of its financial statements, AMI must contend with a debt-load of more than $968 million. Bond rating service, Moody's Investors Service has downgraded AMI's bond rating at least three times since 2004, giving the company a negative long-term outlook and concluding that the Weider transaction failed to produce the cash flow that was expected of it. The most recent downgrade came this week.

To help it better concentrate on its core gossip magazine titles, AMI announced earlier this year that it plans to sell three of the five Weider publications it purchased in 2003 including Muscle & Fitness, Muscle & Fitness Hers and Flex. AMI paid $350 million for the Weider Publications. It also plans to sell music title, Country Weekly and Mira!