Court Stalls Reader's Digest Stock Plan

Share this content:
Reader's Digest postponed a vote by shareholders on a stock reorganization plan scheduled for yesterday after the Delaware Supreme Court barred any reorganization pending the resolution of a suit by several Reader's Digest investors.


The Supreme Court ruling Aug. 12 reversed an earlier favorable decision by the Delaware Chancery Court. William Adler, spokesman for Reader's Digest Association, Pleasantville, NY, said officials were reviewing the decision and had not decided what to do next.


In April, Reader's Digest announced its intention to create one common stock for the company. Its stock is currently split into Class B voting stock and Class A nonvoting stock. The majority of voting shares are controlled by the DeWitt Wallace Reader's Digest Fund and the Lila Wallace Reader's Digest Fund.


Under the recapitalization plan, the Wallace funds would relinquish control of Reader's Digest and receive $100 million in the process. After the changes, the funds would be reduced from a 50 percent voting majority to 14 percent. Nonvoting shareholders then would have a combined 78 percent of the vote.


The investors suing objected to the payout to the Wallace funds while other stockholders would receive nothing, according to reports.


The stock transaction would be paid for through financing from J.P. Morgan and Goldman Sachs, which also financed the Reader's Digest acquisition of Reiman Publications LLC, Greendale, WI.


Reader's Digest completed its acquisition of Reiman in May for $760 million. In conjunction with that, the company said it has finalized arrangements for $950 million of loan financing to pay for the acquisition, to repurchase $100 million of Class B voting common stock and to refinance other existing borrowing.


Though the recapitalization did not affect the Reiman acquisition, future company actions would be subject to a vote by all shareholders if it is allowed.


close

Next Article in Data/Analytics

Sign up to our newsletters

Company of the Week

We recently were named B2B Magazine's Direct Marketing Agency of the Year, and with good reason: We make real, measureable, positive change happen for our clients. A full-service agency founded in 1974, Bader Rutter expertly helps you get the right message to the right audience at the right time through the right channels. As we engage our clients' audiences along their journey, direct marketing (email, direct mail, phone, SMS) and behavioral marketing (SEM, retargeting, contextual) channels deliver information relevant to the needs of each stage. We are experts at implementing and leveraging marketing technologies such as CRM and marketing automation in order to synchronize sales and marketing communications. Our team of architects and activators plan, execute, measure and adjust in real time to ensure the strategy is working as needed and change things if it's not.

Find out more here »

Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here

Relive the 2017 Marketing Hall of Femme

Click the image above