Source Interlink Gets Approval On Restructuring Plan

magazinenewsstandAs I reported 1 month ago, Source Interlink (75 publications and related websites including including motorcycle magazines Hot Bike, Street Chopper, Baggers, Motorcycle Cruiser, Motorcyclist, etc) filed for chapter 11-bankruptcy protection and at the same time submitted to the court a “pre-pack” reorganization plan. A “pre-pack” is a court proceeding in which the creditors will be paid in full or have agreed to take less. It is used to implement a restructuring of a company’s capital without disturbing its daily operations. The objective is to reduce interest expense, significantly improve free cash flow and allow a company to capitalize on several operational opportunities to further improve and grow its business. After obtaining from its lenders cancellation of nearly $1 billion of the company’s existing debt, and getting $100 million of new financing, the court accepted the proposed restructuring plan.  Yesterday Greg Mays sent this letter to announce the good news to all employees.

“Dear Valued Employee,  I am pleased to announce that Source Interlink Companies Plan of Reorganization was approved yesterday.  This official confirmation clears the way for the Company to emerge from the reorganization proceedings as planned in early June.  The reorganization process lasted an unprecedented 31 days!   With your continued help and support, Source was able to continue operations in the ordinary course, and pay all vendors in full and on time.

Over the next few days Source will finalize the legal process and will emerge as a privately held company.  As promised the lenders have cancelled nearly $1 billion of the company’s existing debt and have provided us with approximately $100 million in additional liquidity to the company. The restructuring materially reduces our interest expense and debt levels, and substantially improves our free cash flow allowing us to capitalize on several operational opportunities to further improve and grow our business. As referenced before, the current management will remain in place and the new company will select a regular board of directors after we finalize the legal process.

Again, I appreciate the positive attitudes, hard work and continued support that each of you have demonstrated during this period. Due to the restructuring, your efforts and good managing we can now look forward to a more prosperous future. If you have questions or would like additional information please go to Source Interlink or contact Cindy Beauchamp, at (239) 949-7624”  Greg Mays.

8 Responses to “Source Interlink Gets Approval On Restructuring Plan”

  1. 1 jatinder pal May 30th, 2009 at 10:58 am

    Thank god…cause we definately need magzines…..

  2. 2 Greg May 30th, 2009 at 11:04 am

    But the magazines will have to change a lot and some will have to disappear.

  3. 3 Rodent May 31st, 2009 at 5:12 pm

    Printed mags are over…now the net and Kindle!

  4. 4 Geno Jun 1st, 2009 at 10:49 am

    Ahh Rodent
    Have you tried a Kindle
    they suck
    and you who wants a computer in the john

    real magazines with real editorial content -not just wood pulp full of bike ads will always prosper

    I hope Source sees the error of thier ways and comes back
    with something we all really want to read

    our titles are growing every month

  5. 5 Brent Jun 1st, 2009 at 11:09 am

    Geno, a Kindle is great if you read a book. Even if you are extremely constipated you should not read a magazine in the john. Very unhealthy. And I doubt people will ever take a laptop at that time, About Source magazine: are you a little bit jealous? Nobody can survive without ads. You know too well with The Horse..

  6. 6 Robin Jun 1st, 2009 at 1:52 pm

    I’m a print dinosaur and will always prefer paper over a computer screen… besides computer screens don’t work in baja or the john when there is no TP. As for our friends at SORC, the they even got delisted from the stock market:

    NEW YORK, May 28, 2009 (GLOBE NEWSWIRE) — The NASDAQ Stock Market announced today that it will delist the common stock of Source Interlink Companies, Inc. Source Interlink Companies, Inc.’s stock was suspended on May 14, 2009 and has not traded on NASDAQ since that time. NASDAQ will file a Form 25 with the Securities and Exchange Commission to complete the delisting. The delisting becomes effective ten days after the Form 25 is filed. For news and additional information about the company, including the basis for the delisting and whether the company’s securities are trading on another venue, please review the company’s public filings or contact the company directly.

  7. 7 Eric Jun 1st, 2009 at 3:08 pm

    This happened in the 80s/90s with the car mags (Road & Track for one) and everything went freelance. The company may stay the same but gone are the days of F/T staff at these mags, expense accounts, hot and cold running swag and sending teams of people to events. It is going to get lean and mean for sure. At the end of the day, it’s business and if advertisers ain’t advertising, the mags can’t afford to fill cubes flush with eager aspiring writers and photogs… not when (and I say with without enthusiasm) there are soo many people out there who will do it for free (or at least… for peanuts). That is what happened with Road & Track, Car & Driver, Sports Car, etc. It is a shame, but Source is not different than any other biz… the question is…are they smart enough to emerge from this in the new era or are they going to stick to the old ways. Online is it… Kindle may not be the answer but something similar will be and Robin 🙂 … I take my laptop, phone, etc. on the crapper and with wireless Internet… I can get my Cyril Huze Blog info in the middle of Baja without fail.

  8. 8 Geno Jun 2nd, 2009 at 9:37 am

    Brent? who or what is a brent?
    do your read the mags I publish?

    and am I jealous that Source went bankrupt
    ahh duh no my un constipated friend-
    even though going bankrupt is the
    trend du jour at the moment its just
    not in our future, we make money the ol skool way

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Cyril Huze