MAIN NEWS HEADLINES
January 04 – January 11 , 2007 Edition
Filing Affects Book
Publishing Unit Too
SAN DIEGO, CA/1/2/2007Advanced Marketing Services, Inc. (AMS) (Pink Sheets: MKTS), a leading provider of customized merchandising, wholesaling and contract book distribution services, announced December 29 that it has filed a voluntary petition under Chapter 11 of the Federal Bankruptcy Code in Delawares U.S., Bankruptcy Court. The Chapter 11 proceeding does not include the Company’s international subsidiaries in the United Kingdom, Mexico and Australia, and their operations will not be affected, according to the companys official statement.
AMS announced that, in conjunction with the filing, it has entered into a loan agreement for $75 million in Debtor-in-Possession (DIP) financing from Wells Fargo Foothill, Inc., subject to court approval. The DIP financing should provide sufficient liquidity to meet the Company’s ongoing operating needs during the proceeding and to insure that customer and publisher services will not be impacted by the filing, according to a company press release dated December 29.
A company spokesperson confirmed January 2 that Advantage Publishers Group, the international publishing division of AMS, which publishes adult trade, promotional, and juvenile books, will also be affected by the bankruptcy.
APG Advantage Publishers Group, with a backlist of some 500 titles, includes the imprints of Silver Dolphin, Thunder Bay and Portable Press. Each of these imprints is an ongoing business for AMS. The books are sold to all markets in the USA. Some of the book packagers that supply AMS/APG are creditors in the bankruptcy process, while other book packagers are not as they have not recently supplied APG with product. Some releases are seasonal. The Laurel Glen imprint was terminated as a business this past year and is not an on going business concern. APG uses freelance authors who provide services to many publishers.
In the bankruptcy petition, AMS reported assets of more than $100 million and liabilities of $100 million. The list of top unsecured creditors includes Random House ($43 million), Hachette Book Group ($20 million), Simon & Schuster ($20 million), HarperCollins ($18 million) and Penguin ($20 million). Smaller creditors include Rich Publishing ($4.4 million), Avalon Publishing ($2.3 million), Grove/Atlantic ($1.1 million), and New World Library ($1.1 million). It is uncertain how much or when creditors will be paid.
During the past few months, the Company explored a number of alternatives to strengthen its financial base and resolve past legal and regulatory issues. Despite making some progress, the Company was unable to secure new financing and the current loan facility, used to finance the Company’s operations, was shut off effective December 28, 2006.
“This move will permit AMS, with its investment banker, to continue to pursue strategic alternatives,” said Gary M. Rautenstrauch, President and Chief Executive Officer. “Additionally, Chapter 11 protection will enable the Company to continue to conduct business in the normal course, make payments to vendors going forward and continue delivering quality service and products to customers.”
In 2000, AMS formed a new distribution arm, Advanced Global Distribution (AGD), to serve small-to medium-sized publishers. Two years later, the company acquired Publishers Group West (PGW), the largest distributor of independent publishers in North America. PGW and AGD were folded together into what later became Publishers Group worldwide.
About Advanced Marketing Services, Inc.
Headquartered in San Diego, California, the Company is a leading provider of customized merchandising, wholesaling, distribution and publishing services, currently primarily to the book industry. Founded in 1982, the Company has operations in the U.S., Mexico, the United Kingdom and Australia and employs approximately 1,200 people worldwide. AMS provides a wide range of value-added services that provide its retailer customers with book buying advice, promotional support and expert supply chain management.