The filing for bankruptcy protection by Reader's Digest Association (RDA), the company said in a statement, is aimed at reducing its debt burden by 75 per cent and to strengthen its future financial position.
RDA, a global multi-brand media and marketing company based in the US, has offices in 44 countries and sells books, magazines, music, video and educational products reaching a customer base of 130 million in 78 countries.
It publishes 94 magazines, including 50 editions of Reader's Digest, the world's largest-circulated magazine and sells approximately 40 million books, music and video products across the world each year.
The company said it has reached an in-principle agreement with its lenders to reduce its debt from $2.2 billion to $550 million and its 'Debt-for-Equity Restructuring Plan' is supported by a majority of the lenders.
The restructuring agreement provides that the company's senior secured lenders will exchange a substantial portion of the company's $1.6 billion in senior secured debt for equity and provide for a transfer of ownership of the company to the lender group.