The publisher of Reader's Digest, the US general interest magazine, has announced it will file for bankruptcy protection with a plan to swap a portion of its debt for ownership of the company, Associated Press reports.
Reader's Digest Association, owned by the New York private equity firm Ripplewood Holdings since 2007, said on Tuesday that it had reached an agreement in principle with a majority of secured lenders to erase a portion of the $US1.6 billion ($1.93 billion) they hold in senior secured notes. The lenders will get ownership in return.
The planned filing does not include operations outside the United States.
In a statement, Reader's Digest CEO Mary Berner said the agreement follows "months of intensive strategic review of our balance-sheet issues."
The company intends to seek further agreements from lenders and other stakeholders before making a formal bankruptcy filing within a month.