American Media, Inc. Advances to Next Stage of Financial Restructuring

NEW YORK, Nov. 17, 2010 /PRNewswire/ -- American Media, Inc. (AMI) today commenced the next phase of its previously announced restructuring, which is expected to significantly de-lever its balance sheet and improve its already strong cash flow and cash on hand.

Specifically, and consistent with the terms of the restructuring support agreement the Company signed with bondholders holding more than 75% of their bond debt and secured lenders holding more than 70% of their bank debt, earlier today American Media and certain of its subsidiaries filed a prepackaged plan of reorganization (the "Prepackaged Plan") and chapter 11 petitions in the United States Bankruptcy Court for the Southern District of New York.  The Prepackaged Plan, which has been approved by the majority of creditors entitled to vote on the Prepackaged Plan, contemplates that, among other things, holders of secured term facility claims will receive a combination of cash and new second lien notes; holders of secured revolver claims will be paid in full; holders of subordinated notes will receive stock in the reorganized Company; and holders of trade claims will be paid in full.

In conjunction with today's filing, the Company also filed a variety of motions to continue to support its employees, customers and vendors during the financial restructuring process.  The Company has filed motions seeking permission to, among other things, continue employee wage and benefits programs; honor current customer programs without interruption; and pay trade creditors in the ordinary course of business.  American Media expects that cash on hand and cash from operating activities will be adequate to fund its cash needs as it proceeds with its financial restructuring and therefore does not intend to seek debtor-in-possession financing.

"American Media is engaging in this strategy from a position of financial strength and confidence," said David Pecker, Chairman, President and CEO of American Media. "It will provide the Company with the ability to compete even more aggressively with our peers in the industry. During this period of sixty days or less, there will be no impact on our employees, vendors, or advertisers, as well as our subsidiary company DSI and its customers and partners."

"Publications will function seamlessly, staff will be unaffected by the reorganization and customers should not notice any difference during this short process. Our advertisers, vendors and publishing services clients have already expressed strong support and confidence," continued Mr. Pecker. "They understand that American Media will be a stronger and healthier company following this restructuring."

American Media has retained Akin Gump Strauss Hauer & Feld LLP as legal counsel.

The Company's principal chapter 11 petition has been assigned case number 10-16140.  Additional information about the Company's restructuring, including the disclosure statement describing the Prepackaged Plan, is available at www.kccllc.net/AMI.  You may also receive information from the Company's restructuring hotline at (877) 660-6698.

This press release is for informational purposes only and shall not constitute a solicitation to accept or reject the Prepackaged Plan 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 the Company, including those related to the Prepackaged Plan.  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 confirmation of the Prepackaged Plan by the Bankruptcy Court, 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 the Company'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, the Company declines any obligation to publicly update or revise any such forward-looking statements.

About American Media

American Media 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, American Media 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.