Evercore and THL investors will each fund approximately one-half of the total equity of $508 million in the recapitalization. Following the transaction, Evercore and THL will jointly control AMI.
The transaction will be structured as a recapitalization in which the original investors in the May 1999 purchase of AMI, led by Evercore, will sell their interests to the new investor group.
American Media Chairman, President & CEO David J. Pecker said, "This new capitalization of AMI better allows us to build a larger media company and makes the multi-billion dollar funds from Evercore and THL available to us. Thanks to the efforts of Austin Beutner and Evercore, our recent acquisition of Weider transformed us from a tabloid publisher into a consumer magazine company, and this new transaction will let us pursue even bigger targets. Thomas H. Lee Partners' investment will be a great addition for AMI, not only in terms of capital, but also in their wealth of experience."
Austin M. Beutner, Evercore President, said, "It has been a great and very profitable partnership with David Pecker and the team at AMI over the last four years and we look forward to the next phase of growth. As the company has proven itself in building significant value through acquisitions, and as the acquisition environment is becoming more favorable, we felt it prudent to recapitalize AMI in order to provide greater financial flexibility. We have partnered with our friends at THL in the past and look forward to continuing together the successful execution of AMI's long-term strategy."
Evercore Partners and Mr. Pecker acquired American Media in May of 1999. AMI purchased the Globe later that same year. Since then they have significantly enhanced the position and performance of AMI's six tabloids, launched four successful new titles, become the leader in the country music magazine market, and recently purchased Weider Publications, the leading worldwide publisher of health and fitness titles, for $350 million. EBITDA has nearly doubled under their ownership.
"This is a solid, proven company with one of the best management teams in the industry, led by David Pecker," said Anthony J. DiNovi, Managing Director of Thomas H. Lee Partners. "AMI has strong, well-established titles, consistent and substantial free cash flow, and terrific growth potential through advertising, pricing, brand extensions, the integration of the Weider transaction and new acquisitions. We are excited about the opportunity to partner with Evercore and David."
This transaction, which is expected to close in mid-April, will have no impact on AMI's 8 7/8% Senior Subordinated Notes due 2011 or its 10 1/4 % Senior Subordinated Notes due 2009.
For the twelve months ended December 23, 2002, pro forma for the Weider acquisition, AMI had operating revenues of $527 million and Adjusted EBITDA of $180 million.
J.P. Morgan Securities Inc. and Bear, Stearns & Co. acted as financial advisors to AMI and Evercore. Simpson Thacher & Bartlett provided legal counsel to AMI and Evercore Capital Partners and Weil, Gotshal and Manges provided legal counsel to Thomas H. Lee Partners.
American Media, Inc. is one of the largest media companies in the U.S. The company publishes six of the 14 best selling weekly magazines, including the #2 and #4 titles, the National Enquirer and Star. AMI recently acquired Weider Publications, the leading publisher of health and fitness magazines, including Shape, Men's Fitness, Muscle & Fitness, Muscle & Fitness Hers, Flex, Fit Pregnancy and Natural Health. The company also publishes the best selling country music magazines, Country Weekly and Country Music; a Latino entertainment magazine, Mira!; two automotive magazines, AMI's Auto World and NOPI Street Performance Compact; and more than 200 Mini-Mags and Digests. AMI recently launched its own book division with 7 titles released to date. In addition to print properties, AMI owns Distribution Services, Inc., the country's #1 in-store magazine merchandising company.
Evercore Partners, based in Los Angeles and New York, manages approximately $1.3 billion of committed capital through its Evercore Capital Partners ("ECP") affiliate. ECP investments include AMI, Energy Partners, Telenet and Vertis.
Thomas H. Lee Partners, L.P. is a Boston-based private equity firm focused on identifying and acquiring substantial ownership positions in growth companies. Founded in 1974, Thomas H. Lee Partners currently manages approximately $12 billion of committed capital. Notable transactions sponsored by the firm include: Houghton Mifflin, TransWestern Publishing, National Waterworks, Endurance Specialty Insurance, Vertis, Eye Care Centers of America, Cott Corporation, United Industries, Rayovac, Fisher Scientific International, Experian, GNC and Snapple Beverage.