Reader's Digest Readies Planned Bankruptcy and News on Other Challenged U.S. Companies for Aug 24

The items below are taken from the Business Bankruptcy News Bulletin. A full issue contains information on dozens of companies. Please visit the insideARM bookstore for information on subscribing to the Bulletin.

Abundant Renewable Energy LLC, a Newburg, Or. maker of small-scale wind turbines, could be bought out of bankruptcy proceedings by Helix Wind Corp. of San Diego, Ca. The purchase price could be in the range of $4 million to $6.5 million in cash and stock, but the deal depends on Helix arranging financing by 11/1. The purchase must also be approved by the U.S. Bankruptcy Court.

Asarco LLC, the U.S.-based copper-mining company, received a new buyout bid from its former owner, Grupo Mexico SAB, which is now willing to pay $2.2 billion for Asarco along with a $280 million note as it battles a rival suitor, India’s Vedanta Resources PLC. Asarco was forced into bankruptcy proceedings by Grupo Mexico four years ago.

Bally Total Fitness Holding Corp. received approval from the U.S. Bankruptcy Court for its reorganization plan, paving the way for the Chicago, Il. chain of fitness centers to emerge from Chapter 11 by the end of the year. The company will be controlled by a lending group led by J.P. Morgan Chase & Co. and Anchorage Advisors LLC, a hedge fund. The lenders, owed more than $240 million, will get 94% of Bally’s equity. The company’s debt will be reduced by $660 million and the lending group will provide $96 million in financing.

Delphi Corp., the bankrupt Troy, Mi. automotive supplier, reported a second quarter net loss of $592 million, slightly larger than its loss in the year-earlier period. Sales sank 42%–to $2.8 billion. Delphi, which has been in Chapter 11 for almost four years, is now hoping to emerge from bankruptcy protection by the end of next month.

Finlay Enterprises Inc. has seen an 8/31 deadline set for filing objections to a motion for relief in its Chapter 11 bankruptcy. For further information contact the U.S. Bankruptcy Court in Manhattan, N.Y. at 212-668-2780 and refer to case number 09-14873.

Frontier Airlines Inc.’s winning suitor is Republic Airways Holdings Inc., which emerged as the top bidder in a U.S. Bankruptcy Court auction for the Denver, Co. carrier’s assets. Republic, Indianapolis, In., stuck with its $109 million offer for all of Frontier’s shares but it also agreed to waive distributions on a $150 million unsecured claim. Frontier found that proposal superior to a $170 million buyout bid from Southwest Airlines Co.  Republic also said that it will keep operating Frontier as an independent unit.

Harp Group put two of its hotel properties, the InterContinental Chicago O’Hare and the Radisson at the Los Angeles International Airport, into bankruptcy proceedings after the collapse of talks to restructure their debt. The two hotels, which are now under Chapter 11 in the U.S. Bankruptcy Court in Chicago, Il., owe a total of $275 million. They do not have prepackaged plans and have not arranged for debtor-in-possession financing.

Lear Corp., the Southfield, Mi. maker of automotive components, filed its reorganization plan and disclosure statement with the U.S. Bankruptcy Court, calling for conversion of $1.6 billion in prepetition credit-agreement secured claims into new term loans and common shares.

Nortel Networks Corp.’s plan to sell its wireless infrastructure unit to Sweden’s Ericsson is coming under criticism from a number of Canadians who believe that the Brampton, Ontario-based telecommunications-gear maker’s technology should stay in Canada. The critics are asking the Canadian government to take a closer look at the $1.1 billion proposed sale.

Philadelphia Media Holding LLC, the owner of the Philadelphia Inquirer and the Philadelphia Daily News newspapers, is filing a plan in the U.S. Bankruptcy Court asking its lenders to exchange $300 million in debt for $90 million in cash, real estate and other value. Creditors, including CIT Group Inc., Citizens Bank and Angelo, Gordon & Co., are skeptical of the proposal, which includes at best just a bit of equity in the newspaper publisher. Further, they question the purported value of the real estate being pledged. A legal representative for one of the lenders suggested that Philadelphia Media should come up with an alternative plan.

Reader’s Digest Association Inc., skipping a $27 million interest payment under a grace period, announced that it agreed with most of its lenders on a restructuring plan that would cut its debt through a prepackaged bankruptcy filing. The Pleasantville, N.Y. publisher’s senior secured lenders will swap a large part of $1.6 billion of Reader’s Digest’s debt for stock in the firm. The lenders will also provide $150 million in debtor-in-possession financing that can be later converted into exit financing. When it emerges from its planned bankruptcy, Reader’s Digest will have reduced its debt by three-quarters–to $550 million. A bankruptcy filing will reportedly not affect its operations outside the U.S.

Tribune Co.’s Sam Zell, who took the media giant private only to land it in Chapter 11 last December sagging under $12 billion in debt, could be booted out if creditors have their way. Reportedly creditors are suggesting in a reorganization plan that they want to take over the Chicago, Il. company and sell off newspapers and other assets for their benefit. The creditors, supposedly losing patience, are owed $8.6 billion by Mr. Zell.