American Family Enterprises to Restructure Finances and Operations; Diversify Beyond Core Sweepstakes Business
Strategic Reorganization Has No Impact on Prize Awards or Magazine
Subscriptions; Company Reaches Agreement in Principle to Settle Class Actions
JERSEY CITY, N.J., Oct. 29 /PRNewswire/ -- American Family Enterprises (AFE), one of the nation's leading magazine subscription companies and the sponsor of the American Family Publishers sweepstakes, announced today that the Company has filed a voluntary Chapter 11 petition in order to resolve its pending litigation, strategically restructure its finances and operations, and to enable it to compete successfully over the long term. The Company stated further that it has obtained funding to assist it through restructuring. AFE also announced that it has reached an agreement in principle to settle its class action lawsuits. The Company expects to report shortly the terms of this agreement which, by court order, are currently confidential. Within the last year AFE has reached voluntary agreements with the Attorneys General of 40 states and the District of Columbia which have defined new standards for the direct mail sweepstakes industry. Today's filing will have no impact on these agreements, all of which will be fully complied with. In addition to its current sweepstakes business, the Company's future plans call for investment to diversify into new and different distribution channels for the sale of both magazines and merchandise. "Today's filing is an important step in the strategic reorganization of American Family Enterprises to position the Company for a successful long-term future," said Susan Caughman, President and CEO. "With the expectation of resolving all outstanding class action litigation shortly, we look forward to the launch of a variety of new businesses and the transformation of AFE into a stronger and more dynamic company." Caughman noted that during the reorganization AFE will continue business as usual, offering consumers the lowest available magazine prices, as well as opportunities to enter a variety of ongoing contests. "This Chapter 11 filing and restructuring will have no impact at all on our on-going sweepstakes. All monies for AFE's contests have been pre-funded and are held in trust by federally-insured, independent financial institutions until the award date. Consumers should be assured that their entries into AFE's sweepstakes are valid and all prizes, including the upcoming $1 million on November 24th and $10 million in January 31, 2000, will be awarded." About American Family Enterprises American Family uses sweepstakes to promote the sale of subscriptions to over 300 magazines at publishers' lowest prices. Since 1977, American Family has awarded more than 300,000 prizes, including $89 million in cash prizes. American Family is owned by TAF Holdings Inc., a subsidiary of Time Inc., and a group of investors. Over the past year, American Family has taken the lead in establishing new reforms and guidelines in the publishers' sweepstakes industry. These guidelines are known as the American Family Promise, and says, among other things, that all entries have an equal chance of winning and that subscriptions can be canceled at any time and the money will be refunded for all undelivered magazines. American Family has also established a website (http://www.americanfamily.com) to answer consumers' most frequently asked questions, reiterate the sweepstakes rules, and publish the American Family Promise.
SOURCE American Family Enterprises
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