American Media Inc. Announces Financial Restructuring Leading Media Company Seeks to Strengthen Financial Position Through Solicitation of Votes on a Prepackaged Chapter 11 Filing; Reaches Agreement with Its Unsecured Bondholders to Support Restructuring

NEW YORK, Nov. 1, 2010 /PRNewswire/ -- American Media Inc. (AMI) today announced its intention to engage in a financial restructuring through solicitation of a prepackaged Chapter 11 plan of reorganization. The Company has informed its investors that, in approximately two weeks, upon receiving the requisite number of votes from its creditors, the Company will initiate a prepackaged Chapter 11 filing in order to confirm and consummate its Chapter 11 plan.  The Company's reorganization is premised around a debt-for-equity exchange with a group of its bondholders, approximately 80% of which have agreed to support the restructuring by executing a restructuring support agreement with the Company.  Through the restructuring, the Company will significantly de-lever its balance sheet and improve its already strong cash flow and cash on hand, and ultimately will improve the growth and success of the Company.  During this time, all Company operations should function seamlessly.

"I want to thank Mike Elkins and his team at Avenue Capital as well as the team at Angelo Gordon for taking an active leadership role in supporting this process by putting additional money into AMI to facilitate our transaction," said David Pecker, Chairman, President and CEO of American Media Inc.  "This demonstrates their total commitment to management and the Company. All of us are very excited about the future of AMI under this new ownership structure."

"For our advertisers, employees, customers and vendors, this short period will be business as usual, with considerable upside in the future," continued Mr. Pecker. "American Media is engaging in this strategy from a position of financial strength and confidence. It will provide us with the ability to compete even more aggressively with our peers in the industry. During this period, there should be no impact to our employees, vendors, or advertisers, as well as our subsidiary company DSI and its customers and partners."

Upon receiving the requisite votes on its prepackaged Chapter 11 plan during the period in which votes are being solicited, the Company will file for chapter 11, and will thereafter seek to emerge from bankruptcy in less than sixty days. That process will, in turn, allow the Company to restructure its debt, including the debt-for-equity exchange that will further improve the Company's financial position.

"The reorganization should not affect American Media's operations. Publications will function seamlessly, staff will be unaffected by the reorganization and customers should not notice any difference during the 60 day process. I want to thank in advance all of our advertisers, vendors and publishing service clients for their support," added Mr. Pecker. "They realize we will be a stronger and healthier company after the consummation of the restructuring."

AMI also announced today that it has terminated the previously announced offer to exchange (the "Exchange Offer") all of the outstanding 14% Senior Subordinated Notes due 2013 (the "Subordinated Notes") issued by AMI's operating subsidiary, American Media Operations, Inc. ("AMO"), for a combination of cash and shares of common stock, par value $0.0001 per share, of AMI, and cash tender offer (the "Cash Tender Offer" and, together with the Exchange Offer, the "Offers") for all of AMO's outstanding 9% Senior PIK Notes due 2013 (the "PIK Notes"), and related consent solicitations.  As a result of the termination of the Offers, no Subordinated Notes or PIK Notes will be accepted for exchange or purchase, and all such notes tendered pursuant to the Offers will be promptly returned to their respective tendering holders.

This press release is for informational purposes only and shall not constitute a solicitation to accept or reject the proposed plan of reorganization referred to herein or an offer to sell or the solicitation of an offer to buy securities, nor shall there be any offer or sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Forward-Looking Statement Disclaimer

The matters discussed in this press release include forward-looking statements regarding AMI and AMO, including those related to the plan of reorganization.  By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.  Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including, but not limited to, the solicitation of votes to approve the plan of reorganization, the confirmation of the plan by the Bankruptcy Court, our ability to obtain the financing necessary to consummate the plan, the impact of changes in national and regional economies, the volatility in the U.S. and global economies and financial credit markets that impact our ability to forecast or refinance our debts as they become due, the overall demand for advertising, volatility in the sale of magazines through subscriptions and at the newsstand and fluctuation in paper and postage prices, among other risk factors.  We undertake no obligation to publicly release the result of any revisions to these forward-looking statements except as required by law.

Consequently, you should not rely on any forward-looking statements and should consider any such forward-looking statements only as AMI's and AMO's current plans, estimates and beliefs as of the date of this press release.  Even if these plans, estimates or beliefs change because of future events or circumstances, AMI and AMO decline any obligation to publicly update or revise any such forward-looking statements.

About American Media, Inc. 

American Media, Inc. is the leading publisher of celebrity journalism and health and fitness magazines in the U.S.  These include Star, Shape, Men's Fitness, Fit Pregnancy, Natural Health, and The National Enquirer.  In addition to print properties, AMI manages 14 different web sites. The company also owns Distribution Services, Inc., the country's #1 in-store magazine merchandising company.

SOURCE American Media, Inc.




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