[1/2] VICE co-founders Shane Smith (L) and Suroosh Alvi (R) pose as they arrive at the 20th annual Webby Awards in Manhattan, New York, U.S., May 16, 2016. REUTERS/Mike Segar
May 15 (Reuters) – Vice Media Group, popular for websites such as Vice and Motherboard, filed for bankruptcy protection on Monday to engineer the sale to a group of lenders, capping years of financial difficulties and top executive departures.
The bankruptcy filing comes as a result of a challenging period for many technology and media companies that have cut costs to survive a weak advertising market amid slowing economic growth.
Vice said the lender consortium, which includes Fortress Investment Group, Soros Fund Management and Monroe Capital, will provide about $225 million in credit bids for nearly all of its assets and also assume significant liabilities at closing.
Under a credit bid, creditors can exchange their secured debt instead of paying cash for the company’s assets. Vice listed both assets and liabilities in the $500 million to $1 billion range.
“Creditors are taking it (Vice) at a deep discount, and we’re going to see if they can become viable with a much leaner capital structure coming out of bankruptcy,” said Thomas Hayes, chairman of investment firm Great Hill Capital.
Vice was among a group of fast-growing digital media companies that once held rich values ​​as they courted millennial audiences. It rose to prominence with its co-founder Shane Smith, who built his media empire from a single Canadian magazine.
Vice has received commitments and consent from the lenders to use more than $20 million in cash, which it said will be “more than sufficient” to finance its business through the sale process.
The company had said on April 27 that it would cancel the popular TV show “Vice News Tonight” as part of a broader restructuring of its news division. A week before that, BuzzFeed Inc ( BZFD.O ) said it would close its news division.
“This climate coupled with a difficult environment for equity raising due to higher rates is taking some of the smaller players out to pasture,” Hayes said.
Reporting by Rahat Sandhu in Bengaluru; editing by Uttaresh Venkateshwaran
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