Summit Business Media To File for Chapter 11
Restructuring plan will cut debt by $135 million.
Summit Business Media has joined the ranks of publishers seeking to reorganize and slash debt through a voluntary Chapter 11 bankruptcy.
The reorganization plan, which received approval from 83 percent of Summit's lenders (less than 100 percent approval forced Summit to go through the courts), will cut outstanding debt obligations by half, or $135 million. Summit expects to emerge from Chapter 11 in the first half of 2011.
If the plan is approved, Summit will use its bank balances (currently more than $10 million in cash) and cash flow from its existing operations to meet working capital needs. The company says any pre-filing advertising, subscription and event contracts will be honored. Lenders have also agreed to offer a debt-in-possession credit facility of $5 million to support the company's additional working capital needs.
"Summit Business Media is a fundamentally sound and profitable company," said president and CEO Andrew Goodenough in a statement. "We believe that Summit is well-positioned to take advantage of economic growth coming out of this unusually deep downturn as the industries we serve rebound.
While Goodenough characterized 2010 performance as "flat," he told FOLIO: that Summit, which generates nearly $100 million in annual revenue, expects an uptick in 2011, particularly from a series of mining industry events in South Africa. Summit had reduced employee headcount from 525 to 350, but is back up to nearly 400, according to Goodenough.
Summit went on a buying binge in 2006 and 2007 under its late founder Bill Reilly, closing about seven deals in 20 months and buying Pfingsten, Highline and Wicks Business Information in rapid succession. For the last two years, however, Summit has focused on paring down its portfolio to its core insurance and professional financial services products.
In 2009, Summit exited the mortgage business by merging its 15,000-cir. Mortgage Originator magazine into Source's Origination News, with Source picking up subscriptions and ad contracts through the rest of the year. Summit also sold its professional training unit Executive Entreprise Institute to SmartPros Inc, as well as its Art Group to Art Miami LLC.
Once the company emerges from Chapter 11, Goodenough says it could start seeking other deals. "We have a number of financial partners who would like to see us expand, and any deals would be of the strategic 'tuck-in' variety," he adds.Â