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Source Interlink's bankruptcy filing will help the company, and its action sports titles, focus on online upgrades and be positioned to grow when the global economy recovers, Al Crolius, the company's senior vice president and leader of the action sports group said in an interview with Shop-eat-surf this morning.
"It's a new beginning for us around here," said Crolius, who oversees 18 magazines and web sites from Source's San Juan Capistrano, Calif., office.
He compared the prepackaged bankruptcy filing to a refinancing. "It's like we went from three mortgages to one," he said.
In essence, the deal allows chief lender Citigroup to take full control of the company in exchange for forgiving about $1 billion of the nearly $1.5 billion in debt Source Interlink took on when it purchased Prime Media in 2007, Crolius said.
"This isn't like a company in a traditional bankruptcy, where we're out of money," Crolius said. "This company is making a lot of money, and that's what made it a favorable business for the banks to invest in.
"Citi and some smaller banks become the major shareholders, and the (common) stock goes away. But if you were following the stock over last six months, it was trading at a range of 18 - 25 cents a share ... because our debt was so high.
"My take on it all, I'll be very open, I've been hoping this would happen for a very long time, to get us out from under the debt the company assumed when Prime Media sold to Source. It's been a very difficult couple of years, with everything going to service a couple billion dollars of debt."
Here are some highlights of our conversation:
"The advertising community and bike companies want that extra tie-in, and we're trying to do that across all our sites," he said.