Penton Media to Evaluate Capital Structure
Publisher hires investment bankers to find ways to reduce its debt.
Penton Media is joining the growing list of over-leveraged trade magazine publishers trying to restructure their debt. In a memo to staffers this week, Penton CEO Sharon Rowlands said the company has hired global investment bankers Rothschild Inc. to assist with an evaluation of its current capital structure.
A review, presumably, is an initial step before Penton looks to renegotiate its debt structure with its major lenders. A Penton spokesperson did not immediately return a request for comment.
It’s no big surprise that Penton is reevaluating its capital structure. Wasserstein & Co. acquired the company in 2006 for $194.2 million, plus assumption and payment of debt, putting the total value of the deal at $530 million. One media M&A observer contacted by FOLIO: estimated that Penton’s debt today could be "close to $1 billion."
A growing number of trade publishers have restructured their debt in recent weeks, including Cygnus Business Media, Advanstar Communications and Questex Media.
Here is Rowlands’ memo:
EVALUATION OF CAPITAL STRUCTURE
Announcement for All Employees From CEO Sharon Rowlands
October 7, 2009
TO PENTON EMPLOYEES:
I wanted to make you aware that we have engaged Rothschild Inc., a leading global investment banking firm, to help assist us with the evaluation of our capital structure.
This is good news for Penton. You have heard me say time and again that Penton’s priority right now is making sure we are positioned with the best products, structure, and resources to address the changing needs of our audiences to be the true heart of our markets, the must-have source of information, and to be the leader as the economy turns. And undoubtedly over the past months, we have made some strong strides—from our move to a market facing structure, to our new editorial optimization initiative, to our sales project, to large advancements in our online product structure and offering, we are putting in the necessary due diligence now to maximize our opportunity in the months and years ahead.
A key factor in Penton achieving our long-term vision is ensuring we have a capital structure in place to allow us the flexibility to fully implement our strategies. This announcement will potentially result in the company substantially reducing the debt it has to service, which will allow us to better manage today and secure our future. Our shareholders have made a significant investment in the company and are actively working with management to ensure that we have the resources and support necessary to drive our business and value today and in the years to come.
A review of our capital structure does not in any way affect changes in strategy, priorities, or focus. So please continue with business as usual, and I will keep you updated on any advancements. This action has no effect on our employees, vendors, or customers.