Advanstar reached an agreement with its lenders to eliminate about $385 million in debt. Industry observers estimated that debt totaled between $800 million and $900 million. In connection with the restructuring, Advanstar's principal stakeholders, including Anchorage Advisors and Veronis Suhler Stevenson, will inject $35 million of new capital into the company. (VSS acquired Advanstar for $1.1 billion in 2007.)
Commenting on the restructuring of Advanstar's debt, an industry observer said, “It sounds like [the second-lien lenders] are getting less than 10 cents on the dollar: $35 million in exchange for getting rid of $385 million in debt. That gives you a bit of a sense of how that debt is being valued in the marketplace.”
Earlier in September, Cygnus, publisher of Kitchen & Bath Design News, emerged from Chapter 11 bankruptcy protection. The restructuring valued Cygnus at about $105 million. CommerceConnect, backed by ABRY Partners, had acquired the company in 2000 for $275 million. The restructuring has reduced Cygnus'debt from about $180 million to about $60 million.
“I think it is serviceable,” Mike Parker, managing director of AdMedia Partners, said of Cygnus' debt, “but that's not to say that [given the economy] that it's not going to be difficult. Like a lot of other [b-to-b media companies], they will have a tough row to hoe.”
Earlier in September, it was announced that Incisive Media, publisher of American Lawyer, National Law Journal and Real Estate Forum, would be split into two companies. The split was a result of the company being overleveraged following its $630 million acquisition by Apax Partners, a private equity fund, in 2007. Apax will keep control of what is essentially the American Lawyer Media business in the U.S., which was again branded as ALM.
Royal Bank of Scotland now owns a 49% stake in the U.S. business. Banks will take over Incisive's U.K. arm, and Apax is investing $15 million into ALM, which has had its debt reduced from $450 million to $300 million.
The unanswered question is which b-to-b media company will be next to undergo a restructuring? Industry observers say that any trade publisher acquired in a leveraged deal between 2005 and 2008 is likely to face some sort of restructuring.
Among the biggest b-to-b media deals from that time frame:
??Hanley Wood acquired for $618 million by JPMorgan Partners in 2005.
??Canon Communications acquired for $200 million by Apprise in 2005.
??Ziff Davis Enterprise acquired for $150 million by Insight Venture Partners in 2007.
??Randall Reilly acquired for $180 million by Investcorp in 2008. M