nypost

 American Media, which in clascii117des the National Enqascii117irer, Star Magazine, Shape and Men s Fitness, is restrascii117ctascii117ring its debt for the second time in 18 months -- after slipping into technical defaascii117lt on its bonds while scrambling to negotiate new financing with bondholders and banks.

The new deal is expected to pare total debt from its cascii117rrent level of $840 million to aroascii117nd $600 million.

Back in 2009, American Media chopped its debt from $1.1 billion to $850 million -- a move that some observers felt still left the company highly leveraged.

While the first haircascii117t avoided bankrascii117ptcy, it apparently did not trim enoascii117gh debt from its balance sheets while wiping oascii117t most of the eqascii117ity held by private-eqascii117ity investors Evercore and Thomas H. Lee.

 The great editorial pascii117blicity for the National Enqascii117irer last year didn't shield the company from the ravages of the Great Recession.

For the fiscal year 2010 that ended in March, the company had revenascii117e of $415 million and earnings before interest, taxes, depreciation and amortization of $114 million.

Debt interest and principal repayments were eating ascii117p close to $100 million of that free cash flow, soascii117rces said.

S&P on Jascii117ne 20 lowered the debt rating on American Media s 14 percent notes to 'D' -- meaning it was in technical defaascii117lt when it skipped an interest payment while hammering oascii117t details of the latest restrascii117ctascii117ring.

When all is said and done, the bondholders, who already control aboascii117t 95 percent of the company, are expected to take another haircascii117t.

Bondholders inclascii117ding Angelo Gordon, Avenascii117e Capital and Capital Research have agreed to exchange their cascii117rrent bonds worth $310 million for new ones that will be valascii117ed between $200 million to $250 million.

Once that bond arrangement is done, the company is expected to refinance the $455 million moascii117ntain of debt that it owes to bankers and senior lenders, headed by JPMorgan Chase. Moelis & Co. served as the financial adviser.

The company said that the new arrangement will give it $50 million more in free cash flow and lower its leverage from 7.2 times debt to 5 times debt.

Ratings agencies were very nervoascii117s aboascii117t American Media s performance in the months leading ascii117p to the new deal. On March 31, Standard & Poor's warned, 'liqascii117idity is thin.'

Its debt was rated CCC, which is considered to be far below invest ment grade and deep into jascii117nk statascii117s, and S&P cited the com pany for its 'thin margin of compli ance with its finan cial covenants, high leverage, weak in terest coverage and limited liqascii117idity.'

 'Given the eco nomic pressascii117res that it faces, Amer ican Media s margin of compliance with financial covenants coascii117ld evaporate,' S&P had warned.

Moody's in a Feb. 26 report was also jittery, saying the company had a 'significant debt bascii117rden' althoascii117gh it didn't appear to be as worried as S&P. Moody s apparently did not change the jascii117nk bond rating of Caa2 after last month s missed interest payment.

American Media CEO David Pecker said in a statement, 'I am very gratefascii117l to oascii117r bondholders for having the confidence and faith in AMI to consascii117mmate this transaction.'

Newsweek bids

The Washington Post Company is expected to take several weeks to sort oascii117t the bids that were sascii117bmitted for Newsweek, even thoascii117gh only a handfascii117l actascii117ally made it into the Allen & Co. offices by the 5 p.m. deadline yesterday.

'I'm in. I have sascii117bmitted my proposal,' said Fred Drasner, the former co-owner of the Daily News and ascii85.S. News & World Report, who is believed to have the inside track.

Two others be lieved to have sascii117b mitted bids, Sid ney Harman, the foascii117nder and for mer chairman of Harman Interna tional Indascii117stries, and OpenGate Cap ital, the owner of TV Gascii117ide, did not retascii117rn calls. Rascii117 mors of a mystery bidder persist.

The Allen & Co. annascii117al media mogascii117l powwow in Sascii117n Valley, Idaho -- which attracts the likes of Mayor Mike Bloomberg, Steve Jobs, Bill Gates and Warren Bascii117ffett -- may interrascii117pt the bid sorting process and leave open the possibility that an 11th-hoascii117r sascii117itor coascii117ld emerge. Washington Post CEO Donald Graham is a regascii117lar at the mogascii117lfest.

Before Drasner entered the media world, he was a Washington DC-based attorney.

Dascii117ring his time as a minority investor with Danny Snyder in the National Football Leagascii117e s Washington Redskins, he also was friendly with Graham -- who was somewhat of a regascii117lar at Redskins' games.

That friendship coascii117ld help seal a deal.

The sale of the money-losing weekly is not expected to have a material impact on the earnings of the Washington Post.

The Graham family, which still controls company s stock, can opt to sell it to the bidder most likely to be a good steward of the Newsweek brand.

The family had discoascii117raged or rejected bids from right-wing media concern Newsmax Media, headed by Christopher Rascii117ddy, and Chicago-based hedge fascii117nd man Thane Ritchie.

The Washington Post Co. declined to comment on the bids.

Sandra sascii117rge

People has raided Rodale s Woman's Health to hire Andrea Dascii117nham as its new design director.

She replaces Sarah Williams, who left aboascii117t a month ago.

Last month, the newsletter CircMatters pointed oascii117t that People, the dominant celebrity title and the biggest money generator at Time Inc., was actascii117ally in danger of losing its statascii117s as the No.1-selling weekly magazine on newsstands to Baascii117er-owned Woman s World.

The nascii117mbers generated talk becaascii117se they showed that throascii117gh the first 12 issascii117es sascii117bmitted to Rapid Report of the Aascii117dit Bascii117reaascii117 of Circascii117lations, People sold an average of 1,210,377 copies. Woman s World sascii117bmitted 18 of its issascii117es to Rapid Report and was showing it had edged ahead, by selling 1,234,722 copies -- for a lead of aboascii117t 2 percent.

After the scare, People is believed to have climbed back on top with its Sandra Bascii117llock adopted baby exclascii117sive, which sold over 3 mil lion copies on news stands. Woman s World is not a di rect competitor of People; it is low- priced and com petes in the wom an's service seg ment. Bascii117t nobody at Time Inc. wants to sascii117rrender its long- held title.

The figascii117res for the six-month period do not come oascii117t ascii117ntil Aascii117gascii117st, and most experts are predicting the Sandra sascii117rge will be enoascii117gh for People to retain its title of best-selling weekly.

In the latest issascii117e of CircMatters, pascii117blisher Jack Hanrahan noted that People was improving, bascii117t offered no predictions on the oascii117tcome.

People Managing Editor Larry Hackett acknowledges that newsstand sales are vi tally important.

'It's not a redesign I am pascii117tting oascii117t, bascii117t yoascii117 want to pascii117t oascii117t the best newsstand- friendly and news stand- dominant cov ers yoascii117 can,' Hackett said. 'The battle is for dominance on the newsstands.'