The Media Business; A Maxwell Flagship in Bankruptcy
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The Maxwell Communication Corporation, the publicly held corporate flagship of Robert Maxwell, tonight became the latest domino to fall in his crumbling publishing empire when it announced that it had filed for bankruptcy protection from creditors in New York. In a statement issued late tonight, the company, which owns several American businesses — including Macmillan Inc., the big publishing house — said an important reason its board had decided to seek protection in the United States was because “the bulk of its revenue and operating profit is generated by businesses located in the United States.” Those businesses, which account for about 80 percent of the company’s assets, also include Official Airline Guides, P. F. Collier encyclopedias and half of the Macmillan/McGraw-Hill School Publishing Company. Maxwell Communication said the holding company was the only concern in bankruptcy under the filing, not the operating companies. The American businesses have revenues of $1.25 billion and operating profits of about $225 million, the company said. By filing for protection under Chapter 11 of the United States Bankruptcy Code, which gives the company time to work out a plan to pay its debt, the company is trying to put itself into a stronger position to bargain with its 40 or so lending banks, which were scheduled to meet on Wednesday. The bankers had already been talking about breaking up the company and selling off parts of it to pay off the company’s debt, which totals $:1.3 billion ($2.37 billion), the company said. The only question in many of the bankers’ minds was whether to push for the company to be liquidated immediately or to wait for an economic recovery in the United States so that the businesses might fetch a higher price. While the larger lenders seemed to prefer selling the company off piecemeal over the next two to three years, some smaller ones apparently did not want to be stuck that long. Meeting With Banks The decision to seek bankruptcy protection in the United States came after a meeting this afternoon with a steering committee of the banks, where a special investigation of the company’s financial health that has been conducted by Price Waterhouse, the accounting firm, was presumably discussed. In an interview tonight, John Coyle, a Maxwell Communication spokesman, contended that there had been “no threats” from the banks at the meeting. But he said he did not know whether the banks had been informed of the Chapter 11 filing or whether they had agreed to it before the company had acted. The Daily News in New York, which is owned by a private company that belonged to the Maxwell family, sought Chapter 11 bankruptcy protection on Dec. 5, also in New York. It did so immediately after the two private holding companies at the heart of the Maxwell empire, one of which is the paper’s parent, filed for the British equivalent of bankruptcy protection. Some analysts say they believe that one reason The Daily News filed was to insulate itself from the bankruptcy administrators appointed by an English court, who conceivably might have been less willing to keep it going. There are also suspicions that Kevin Maxwell, the son of Robert Maxwell who has been active in trying to draw up a reorganization plan for The Daily News, is hoping that he will be able to use American law to hold on to that piece of the Maxwell empire. Even before the empire’s collapse, Maxwell Communication’s financial health had been fragile. It had been struggling under the burden of its debt, which it had mainly accumulated when Robert Maxwell paid $2.6 billion for Macmillan and $750 million for Official Airline Guides in 1988. In the last couple of years, the company sold off a slew of businesses to pare its debt. In early November, the company’s leaders had even thought that it would be able to meet its next big debt payment — $750 million due next October — without having to sell its core businesses. But then the private Maxwell companies, which own most of the family’s 68 percent stake in Maxwell Communication, collapsed under a mountain of debt and filed for the British equivalent of bankruptcy protection early this month. Effect of Pension Revelation More : query.nytimes.com |