MUSIC NEWS - Source Interlink, parent company of USA CD/DVD distributor ALLIANCE ENTERTAINMENT, this week filed for Chapter 11 bankruptcy protection, saying it will reorganize over the next 35 days, to re-emerge as a private company. Source Interlink execs said the filing isn’t expected to affect music company or home entertainment vendors, listed in the filing as key creditors, or product shipments Alliance's retail clients who get CD / DVD product from the company. Alliance Entertainment supplies CDs
In the filing with the US Bankruptcy Court in Delaware, Source Interlink revealed $1.99 billion in debts and $2.44 billion in assets. As part of their pre-packaged filing, SI lenders have agreed to write off $970 million in debt in exchange for ownership of Source when it comes out of bankruptcy. Citibank and JP Morgan will own the largest shares of the company, Source Interlink group VP Cynthia Beauchamp said. Lenders also agreed to issue an additional $100 million line of credit to Source in addition to an existing $250 million line. Source Interlink said significant declines in print advertising and the recession prompted the filing with declining cd and dvd also contributing. The Bonita Springs, Fla.-based company publishes 75 magazines, including Motor Trend, Hot Rod and Street Chopper, Surfer and is owned by billionaire Ron Burkle.
The company's purchase of Primedia's Enthusiast Media Group saddled Source Interlink, a leading distributor of magazines, with a heavy debt load. To cut costs, Source Interlink merged its magazine distribution operation with its CD & DVD wholesale operation, late in 2008. This latest filing marks the second time that Alliance Entertainment has involved in a Chapter 11 filing. Back in 1998, it become the only US one-stop to successfully emerge from a Chapter 11.
Layoffs aren’t expected as a result of the reorganization, though Beauchamp said Source Interlink will continue to look at “getting as lean as possible.”
See local coverage in the Fort Myers, FL News-Press
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