As Galleycat reported this morning, reporter Peg Brickley has noted the following: On Monday, AMS is now seeking the Delaware Bankruptcy Court’s permission to sell itself or refinance its senior debt. The senior debt, of course, is the $220 million that is owed to publishers. Should the Court provide AMS permission, this would permit them to raise additional monies to pay off the existing debt, converting the debt into equity. But it remains to be seen whether AMS’s proposed plan would involve a swift revenue return to the indie publishers now left in the lurch or one that could go on indefinitely, as AMS attempts to raise its cash through a sale. It is also unknown whether AMS would seek protection from its creditors under the current bankruptcy plan. Either way, this setback isn’t good news for the Q4 2006 revenues now owed to publishers. As previously reported, a creditor’s committee meeting is scheduled for this Friday. So hopefully we’ll have some more information by the end of the week on whether there are any developments on the senior debt.
There’s been some discussion by PW readers on this issue. Tom Haworth writes, “”One would think that Publishers would keep better track of the financial condition of a company that had not produced a legitimate quarterly or annual report for the past 3 years. The financial arm of all piublishers [sic] need to be more up to speed with the deals the sales and marketing arms are making. It’s easy to say that AMS’ customer are so big and strong that we must continue to pursue this business. But, one must remind the publishers that these companies (Costco, Sam’s and BJ’s) assume very little if any risk in dealing with AMS.”
“Best coverage” or not, there’s been nothing else from the conspicuously silent PW on the purported “sources” who claimed that AMS was looking to unload PGW on a seller. So I’m going to have dismiss PW‘s report as rumormongering until they can come up with something concrete.
For those interested in the early PGW culture, Pat Holt offered a remembrance in January 2002. Of PGW co-founder Charlie Winton (now head of Avalon), who was replaced as President and CEO in favor of Rich Freese in July 2003, Holt writes, “And Winton did more: He delivered regular payment to cash-poor independent publishers who were accustomed to being the last vendor to be paid; he made it easy for independent booksellers to buy from a wide array of books without drowning in paperwork; he got orders for books from chain bookstores that would never have considered listening to a sales pitch from the smaller presses; and he established an in-house department to help independents with deadlines, editing and book design.” My, how times change! It’s worth noting that Holt expressed great reservations about the AMS sale, noting that AMS was “the opposite of PGW.”
More on Winton from 2002: “As for the acquisition’s effect on publishers and the culture, it’s been a while since the sky-is-falling crowd really had anything to stew about–you might have to go as far back as B&N-Ingram–so if nothing else, Winton gave them some fodder. The argument: that Winton’s damn-the-torpedoes attitude–he was known for carrying publishers and books he liked even when their numbers were questionable–won’t fly with corporate bosses that just paid $37.3 million in an tight market.”