Golden Books has reached an agreement with its creditors that will restructure the company's long-term debt and keep the publisher under the control of its current management, led by Richard Snyder. The recapitalization plan will take place following court approval of a prepackaged reorganization plan that Golden is expected to file shortly. As part of the financial reorganization, Golden has arranged for a $55-million loan from the CIT Group.
Under the new agreement, senior noteholders who held $150 million in notes due 2002 will receive a new note for $87 million plus 42.5% of new Golden stock that will be issued after the recapitalization is completed. In addition, certain holders of Golden's Convertible Trust Preferred Securities (TOPrS) due in 2016 in the amount of $110 million will receive 50% of the company's stock following the recapitalization. In essence, the financial reorganization means that Golden's long-term institutional debt has been reduced from about $300 million to approximately $87 million.
Another part of the plan calls for shareholders to surrender their stock for out-of-the money warrants to purchase 5% of the new company stock. While a Golden spokesperson conceded that shareholders may not receive any new shares, he noted that if the company had filed for Chapter 11, the shareholders would have had no chance to recoup any part of their investment.