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Ziff Davis avoids defaulting on $15 million bond payment

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New York--In another clear sign of the debt problems facing b-to-b media companies, Ziff Davis Media Inc. announced Tuesday that it avoided defaulting on a $15 million bond payment by entering into an amendment and forbearance agreement with its existing bank lenders with respect to its senior credit facility. The agreement will be in effect until March 15.

Ziff, which publishes PC Magazine, eWeek and CIO Insight, said that as part of the agreement, Willis Stein & Partners III L.P., the primary backer of the media company, has agreed to provide up to $25 million in support of the credit facility.

Additionally, Ziff announced that it has hired Greenhill & Co. L.L.C. to assist senior management in evaluating strategic alternatives for recapitalizing the company's long-term debt.

Ziff said it now expects to post a restructuring charge of up to $275 million for the fourth quarter of 2001.

The company had initially expected a restructuring charge of at least $150 million. The charge will cover costs from discontinuing certain businesses, the consolidation of facilities resulting from reduced headcount as well as the write-down of long-lived intangible and other assets to fair value based on current market conditions.

Ziff said it was working to improve cash flow and had reduced annualized costs by more than $100 million. It also said that ad sales targets were being met for the first quarter.

Nonetheless, the outlook remains bleak. "We continue to have significant decreases in advertising pages in many of our publications and visibility for increases in the near term is limited,” said Bart Catalane, the company's COO-CFO. “We have therefore prepared ourselves for continued difficult business conditions through most of 2002, and we continue to evaluate the company's size and cost structure to reflect this environment."

--Sean Callahan

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