ZIFF DAVIS WINS FORMAL APPROVAL FOR DEBT PLAN

Bankers to Give $80 Million Cash Infusion to Troubled Publisher

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NEW YORK (AdAge.com) -- Late last week troubled publisher Ziff Davis Media won approval for its restructuring plan, which will allow the company to reduce significantly its debt obligations without a trip to bankruptcy court.

The deal required the approval of bondholders representing 95% of $250 million in debt. Today the company announced it had won formal acceptance of parties holding 95.1% of the debt.

Lowered debt
The restructuring will

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reduce debt by $147.4 million, by giving bondholders about 62 cents on the dollar in the form of cash, new notes, and stock and stock warrants. It will reduce the company's annual cash debt service to about $15 million a year, as compared to about $50 million a year before the restructuring. As part of the agreement, Willis Stein & Partners will throw in $80 million in cash to the company.

"The balance sheet was an ugly story when you have $50 million of debt service vs. what [earnings before interest, taxes, depreciation and amortization] we were pulling in," Chairman-CEO Bob Callahan said. (The company is projecting $6.5 million Ebitda on revenues of $236.8 million for calendar 2002.)

'Healthy as a hog'
"We've finally cleaned up the balance sheet, and we're healthy as a hog," Mr. Callahan said.

He said that given the restructuring and all the cost-side measures the company has taken -- Ziff has shuttered six magazines since 2000 and converted another to a newsletter -- it does not expect to need more cash infusions from Willis Stein.

While the company must still contend with a cratered tech advertising market and can look back on head-spinning headcount reductions, the restructuring looks likely to take significant pressure off Ziff. Ebitda had not been sufficient to meet annual debt service, but projections the company made in a June filing with the Securities and Exchange Commission indicate that will no longer be the case beginning nest year.

Web operations
Mr. Callahan also said the company's Internet operations, which had posted significant losses, will turn profitable either the last quarter of this year or the first quarter of 2003.

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