Two months after its original reorganization plan was shot down in court, Reader's Digest Association Inc. announced a revised stock reorganization plan yesterday.
The revised terms still will create one common stock for the company, which currently has its stocks 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 new plan, the Wallace funds would relinquish control of Reader's Digest and receive $100 million in the process, as was the case in the original April plan. After the changes, the funds would be reduced from a 50 percent voting majority to about 13 percent. Current nonvoting shareholders then would total about 79 percent of the vote.
The new plan has the company repurchasing more than 4.5 million shares of Class B stock at $21.75 per share as opposed to the old plan, which would have purchased 3.5 million shares at $27.50 per share. The new plan lets the company repurchase about 1 million more shares.
Remaining shares of Class B stock will be exchanged at a ratio of 1.22 instead of 1.24 as laid out in the rejected plan.
The next step, according to Reader's Digest spokesman William Adler, will be to schedule a special shareholders meeting for a vote on the new plan. Though a date has not been set, Adler said it would take place by the year's end.
Reader's Digest postponed a vote by shareholders on a stock reorganization plan scheduled for Aug. 14 after the Delaware Supreme Court barred any reorganization pending the resolution of a lawsuit by several Reader's Digest investors.
The recapitalization does not need court approval as long as the parties involved vote in favor of the new plan.