Source Interlink Files for Bankruptcy

Magazine distributor and publisher Source Interlink is filing for bankruptcy—and going private.

The company—controlled by billionaire Ron Burkle's Yucaipa Cos.—announced today that it has reached an agreement with its lenders to “eliminate approximately $1 billion dollars of existing debt” and privatize the company.

At yesterday's market close, Source stock was trading at 16 cents per share. (In August 2007, when Source acquired the Primedia Enthusiast Group, its stock was upwards of $4 per share. A year earlier, it was above $10 per share.)

Under terms of the agreement, the company’s lenders will cancel nearly $1 billion of the Source’s debt, as well as funnel $100 million in additional liquidity. Source, in turn, has agreed to pay “all of its vendors in full and on time.”

As part of the restructuring, the company filed a lender-approved plan of reorganization under Chapter 11 in the U.S. Bankruptcy Court.

“We couldn’t be more pleased,” Source Interlink CEO Greg Mays said in a statement. “This restructuring will materially reduce our interest expense and debt levels, substantially improve free cash flow and allow us to capitalize on several operational opportunities to further improve and grow our business.”

Mays said he anticipates Source will emerge from bankruptcy within 35 days.

Earlier this year, Source was at the center of a massive magazine distribution lawsuit, claiming rival wholesalers as well as publishers—like Time Inc., Hachette and American Media Inc.—were attempting to force the company out of business.

The company eventually settled with most of the defendants (Bauer is the lone defendant remaining in the lawsuit).

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Source Settles with Hachette, Curtis, Kable

Post Comment / Discuss This Story - Info/Rules

source merchandiser

Submitted by Anonymous on Tue, 04/28/2009 - 15:44.

My district manager looked me straight in the eye last Thursday, the 23rd, and denied we were having financial problems! I told her I had been reading foreboding reports on the Internet, including this website, and rumors were running rampant. Still she denied anything. Can't even trust your own managers. I say most Chapter 11 companies, cannot continue in business, even after all this wheeling and dealing. It's sad, but I'll just sign up with whoever takes over my store.

If you were employed by this

Submitted by aesir141 on Tue, 04/28/2009 - 20:16.

If you were employed by this company from present to more then 30 days and obviously had access to the internet, clearly your district manager wasn't the only one who was ill informed. Look your a 'worker bee' and worker bees are always needed, either under the present company name or another - so relax and take a chill pill, because obviously you are new to this industry or you would have had a clue.

worker bees are always

Submitted by Anonymous on Wed, 04/29/2009 - 07:42.

worker bees are always needed? look at the "worker bees" from anderson news all the hives are dead and gone because the source and news group didnt take all the worker bees good luck from a former anderson news worker bee i had to realize that this was a dying industry find another job and move on good luck to you all

i have been employed 4 years

Submitted by Anonymous on Wed, 04/29/2009 - 12:20.

I'm sorry, I have no "crystal ball" and didn't foresee anything. I've been here 4 years and rather like my job. Since you feel the need to be so harsh, YOU can take a chill pill. I'll go on unemployment (which I'll probably make MORE than working) and find something else. I DO have a college degree! Judging by your grammar and spelling, I doubt you have much education!

Worker Bee's

Submitted by Anonymous on Wed, 04/29/2009 - 16:06.

In the state that I live in, out of 82 employees only 12 were called back.

In a Bankrupt Company

Submitted by Anonymous on Thu, 04/30/2009 - 15:25.

I'm currently working in for a company that filed for chapter 11 a little over a year ago. we're hoping to be out by July '09, so the fact that your company is planning to be out in 35 days because they already have a deal lined up, means you won't have to go through the drawn out process of waiting to see how the company does and watch the # of employees dwindle every few months, after being told that we're doing well and getting ready to come out of bankruptcy. The moral is so low here. Hopefully the private backer it seems you have will keep all the employees.

Submitted by Anonymous on Thu, 05/07/2009 - 06:32.

If you're in this industry, you must realize that it really is dying out like the person above said. Magazines are in a slump, DVD's can be downloaded, newspapers are begging people to subscribe. This company has to make some bold moves to stay alive. I work for a company that recently just emerged Chapter 11 so it can be done. It took years because they kept requesting extensions so it was a scary ride. Hopefully this company can pull out, I wish the employees the best.

"We could not be more please" quote

Submitted by Anonymous on Thu, 07/16/2009 - 09:32.

"We couldn't be more pleased." What a horrible thing to say while filing for BK with your shareholder's listening to everything you say about how their shares are now worthless. I doubt they will emerge out of the BK and if they do their employee morale is taken a big hit. How do you function with employee morale or enthusiasm so low. Also the lawsuits and litigation involved with this filing, the lawyers involved and the C Level Executives salaries/bonuses are the only thing going up or smiling all the way to the bank with this company.

Nearly $1 billion in debt, distributor agrees to go private.

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