1Up Vice President Simon Cox considers the Chapter 11 bankruptcy a step forward for the corporation.
When word that gaming media company Ziff Davis was filing for Chapter 11 bankruptcy, the shock surprised many gamers who questioned the health of its print and digital properties.
Simon Cox, Vice President of Content for the 1UP network, is answering these people through a short blog post simplifying the terms of the bankruptcy. The motivation for the move was to allow Ziff Davis to exchange its debt to bondholders and grant them a stake in the company.
“Ziff has been saddled with an enormous amount of debt for many years,” explained Cox. “An amount so large that even though we’re a profitable company (and growing all the time), the repayments were killing us; servicing that debt meant that we had very little money to play with and to invest in all the great ideas we have every day for taking our mags and websites to the next level. So last year we brought the bondholders of that debt to the table and proposed that they turn that debt into equity in Ziff Davis.”
He continued, “What they couldn’t quite agree on was who got what percentage of the company, and so we have asked the court to decide that for them. And for us. The process will take about three to four months, and at the end of it we will effectively have new owners. In the meantime, our day-to-day operations are completely unaffected. In fact, the major bondholders have kicked in a bunch of cash to make, if anything, our day-to-day operations run smoother than they have in years.”
His message is clear; this exchange of equity will only improve the products.
Cox concluded, “The reason why this is going to be positive thing for us is that once we re-emerge from the other side of this, fully intact (as we assuredly will be), we will have reduced that debt significantly, and the payments that go with it. Our earnings will once again be our own, and we will have spare cash to invest in building bigger, better, faster, stronger and better-looking websites and magazines.”
Published: Mar 10, 2008 03:00 pm