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Posts Tagged ‘Advanced Marketing Services’

Wobbly News on the Baker & Taylor Front

Distributor Baker & Taylor is waging battles on all fronts. First PW Daily reported yesterday that the ongoing fallout from the AMS bankruptcy took another turn as B&T – ordered by Advanced Marketing Services to pay up over $6.2 million allegedly withheld – filed a cross-motion of its own in U.S. Bankruptcy Court in Delaware, which is overseeing AMS’s bankruptcy, claiming that AMS sought relief in the wrong place. According to B&T, the APA “plainly and specifically provides that disputes concerning the calculation and determination of the Purchase Price are to be referred to an accountant.” Further, B&T alleges that it is owed $1.75 million by AMS for services rendered and expenses through the end of June, a figure which it says will rise to $2.5 million by mid-September. “Financial record keeping and reporting is well known by all not to be AMS’s forte,” the 25-page cross-motion goes on to state, which is about as bold an understatement as you’ll find.

Later, Judith Rosen reported that PMA, the Independent Book Publishers Association, has notified members that it is stepping in to help resolve grumblings about slow payments from Baker & Taylor . “A lot of responses I’m getting,” said PMA director Terry Nathan, “say that B&T has not been very responsive in the past. I’m giving it two weeks before I step it up a little bit. This will at least put B&T on alert, and they’ll starting treating independent publishers the way they treat large accounts.”

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AMS Wants B&T To Pay Up

Thought there still wouldn’t be news about AMS, its bankruptcy, and resulting fallout? Think again. PW Daily’s Jim Milliot reported yesterday that Advanced Marketing Services filed a motion last week asking the judge who’s overseeing the company’s bankruptcy to force Baker & Taylor to pay AMS $6.2 million that AMS alleges B&T wrongly withheld when it made its final payment to acquire the majority of the bankrupt distributor’s assets. According to the motion, when the final installment came due in May, B&T paid $4.1 million rather than the $10.3 million that AMS had been expecting.

The decision to not pay the full amount, AMS said, is based on B&T’s “unfounded and patently erroneous interpretations” of the Asset Purchase Agreement. B&T alerted AMS that it was withholding the $6.2 million in an April letter from B&T CEO Richard Willis, and AMS said that its attempts to resolve the dispute since then have proved fruitless, prompting it to file the motion. AMS believes Judge Christopher Sontchi has it within his authority to decide the issue without any need for further discovery or an evidentiary hearing. The motion is set to be heard August 15 and objections can be filed by August 8.

This Week in AMS: More Time Requested, Victory for Nonconsentings

The San Diego Union-Tribune reported at the end of last week that Advanced Marketing Services is asking the Delaware bankruptcy court to have until August 10 to file for Chapter 11, an extension from the current April 28 deadline. Bankruptcy law gives companies a limited amount of time to propose a Chapter 11 plan to pay creditors without competition from rival plans. As has been widely reported, AMS sold Publishers Group West to Perseus and its wholesaling operations to Baker & Taylor .

Meanwhile, as more former PGW clients sign on with different distributors (including National Book Network, which was in the running to buy PGW outright) one non-consenting publisher was victorious in court at the end of March. Goofy Foot Press, a single-title publisher run by Paul Joannides, was awarded all of the post-petition sales that it requested–a payment that other PGW publishers received. PW Daily further reported that Judge Christopher Sontchi issued a stern rebuke to AMS’s attorneys, calling their treatment of Goofy Foot and other small presses, from whom he had received numerous letters, “outrageous” and threatened to withdraw the executive compensation order for bonuses. According to the hearing transcript released this week, the judge said their actions were “inconsistent with the representations that were made to the Court for the basis to approve the PGW sale to begin with,” and added that if the sale hadn’t already gone through, he would have stopped it. Harsh words, if a bit on the 20-20 hindsight front.

As for Goofy Foot, PW Daily adds that the press is close to signing on with NBN, which illustrates a point made here in the midst of the AMS fray: even losing the bid for PGW made NBN a winner because they could cherry pick among the non-consenting publishers and take on a smaller, more cost-effective load and thus remain able to break even or at least turn a profit. Perseus, of course, got to acquire the publishers it truly wanted (like Avalon and Grove/Atlantic) and integrate dozens more for its own devices. There’s much dust to settle, especially with a court hearing still slated for April 20 for releasing books still held by PGW.

4th Quarter Growth for Wiley

In a statement released yesterday, John Wiley & Sons announced that third quarter revenue of $297 million increased 7% from $278 million in the previous year’s third quarter, or 5% excluding favorable foreign exchange. Adjusted earnings per diluted share was $0.55 for the third quarter, excluding an income tax benefit of $1 million, or $0.02 per diluted share. Adjusted earnings for the quarter include incremental stock option expense due to the adoption of SFAS 123R of $3 million, or $0.03 per diluted share, and a bad debt provision of $5 million, or $0.05 per diluted share related to the bankruptcy of Advanced Marketing Services, a distributor to warehouse clubs. For the first nine-months of fiscal year 2007, Wiley’s revenue advanced 9% to $845 million from $778 million in the comparable prior year period. Adjusted earnings per diluted share for the nine-month period was $1.37, excluding an income tax benefit of $5 million.

“Wiley had another solid quarter, as reflected in top-line growth of 7%. While all of Wiley’s businesses contributed to the year-on-year growth, our Global STM business had a particularly strong quarter,” said William J. Pesce, President and Chief Executive Officer.

Today in AMS: Tell it to the Judge

It’s a big day in the story of Advanced Marketing Services‘ Chapter 11 bankruptcy, as Judge Christopher Sontchi is set to rule on various motions pertaining to AMS’s future, the competing bids for Publishers Group West by National Book Network and Perseus, and on the most important part of the proceedings: money. Or of course, he may not, if a motion to delay a decision is passed. But to say the industry is waiting on pins and needles for what the judge might decide is, shall we say, a big understatement.

Shelf Awareness has comments from both sides of the PGW bid party. David Steinberger, CEO of Perseus Books Group, said that after “an
extraordinary weekend,” the company has signed up PGW publishers
representing about 85% of PGW revenue, well above the 65% threshold
level set when it made the initial offer a month ago. He noted, too,
that Perseus had changed the offer slightly, “introducing an early exit option” that will be applicable to all publishers that have signed with Perseus regardless of when they signed. “We feel that any further delay in the process would be very unfair to the PGW
publishers and PGW staff who have suffered enough.”

But NBN President Jed Lyons told the online broadsheet that that the
distributor has contracts with more than 70 PGW publishers. “We’re very pleased considering we’ve only being doing this three days. It’s
extraordinary.” He noted that because Perseus is buying Avalon and
because Grove/Atlantic is a strong Perseus supporter, “probably a third of PGW revenues has been off limits for us.” (Speaking of Avalon, Charlie Winton, the company’s president, gets a big write-up in the LA Times as they finally get on the AMS bankruptcy bandwagon.) In addition, Lyons said he had sent PGW publishers a statement from Fortress Investment Group, whose Drawbridge Long Dated Value Advisors of New York is providing financing for the deal.


Radio Free PGW
, as always, has the updates and insight, but today’s nugget comes by way of PGW publisher Vicki Lansky: “I have often found that life’s most important decisions/choices are based on incomplete information (marriage, having a family, believing in god, starting a business, figuring out the right distributor). I’m going to let the court make the best guess it can. Too many unknowns. (My guess is that neither would be perfect.) Having a distributor is better than not having one, that is all I know. I think we’re lucky that 2 companies are willing to slug this out over us. We could have no one interested in bailing PGW (and in effect, us) out. I hope however this works out, it works for you.” And that sentiment sure works for us…

Today in AMS: More on NBN Offer and PGW’s Options

Yesterday’s news of the National Book Network‘s offer to Publishers Group West clients who have been imperiled by the Advanced Marketing Services Chapter 11 filing has, understandably, thrown quite the monkey wrench in what seemed to be an orderly (if steamrolled) handoff of client contracts to Perseus. Since sending that letter, NBN president Jed Lyons told Shelf Awareness that “we’ve been inundated with publishers. We’re furiously taking calls and making calls.” He called the offer “pretty straightforward” and thought it would be more attractive to most publishers than the offer made by Perseus. And PGW President Rich Freese – a former NBN employee – commented in a memo to publishers that “I know that NBN appreciates PGW’s close relationship with our customers and will undoubtedly maintain the high level of service and reliability that you have come to expect from PGW.”

So what’s the problem? According to Radio Free PGW – a publisher who is decidedly in NBN’s corner – PGW sent a plea to its publishers to ignore “a clearly superior offer from NBN” on the basis that time is, essentially, running out. “Given the limited time we have available, we believe that it is imperative that our publishers support the Perseus transaction and execute the Perseus agreement so as to eliminate any uncertainty as to the company’s ability to consummate a transaction,” reads yesterday’s communique. But since Perseus’s offer is merely that – an offer, and one that still hasn’t reached its 65% of publishers threshhold – a PGW publisher is very much free to consider, and accept, NBN’s terms. Especially if the February 12 court hearing is postponed, as per Rich Publishing’s recent motion.

Meanwhile, the San Diego Union Tribune reports that AMS is asking a bankruptcy court to let it pay retention bonuses of approximately $750,850 to 117 PGW employees, the money which would be paid out by potential buyer Perseus. A hearing on the request is scheduled for Feb. 28 in the U.S. Bankruptcy Court in Wilmington, Delaware.

2nd Quarter Earnings Fall Sharply at HarperCollins

NewsCorp, the parent company of HarperCollins, has released its full earnings report for the 2nd quarter ending December 31, 2006, and the outlook for the publishing house is one of decline. HarperCollins reported second quarter operating income of $54 million, a decrease of $23 million versus the same period a year ago which included strong sales from The Chronicles of Narnia series by C.S. Lewis. The year on year decline also reflects charges in the current year due to the bankruptcy filing of Advanced Marketing Services. Better news included 39 books on The New York Times bestseller list, including four books that reached the number one spot.

Today in AMS: S&S Bid Rejected, Economies of Scale

Buried at the end of Julie Bosman‘s New York Times piece about Perseus‘s offer to acquire the distribution contracts of Publishers Group West clients is that the federal bankruptcy court in Delaware rejected a bid by Simon & Schuster to reclaim books in Advanced Marketing Services‘ inventory that could be valued at $5 million. “We made an aggressive move to reclaim the books that were in their possession during the 45-day period before they filed Chapter 11,” said Simon & Schuster VP of marketing Adam Rothberg.

And the San Diego Union-Tribune reports that a Jan. 31 hearing has been scheduled on AMS proposal to establish procedures to sell all or part of the company or to find an investor willing to put up new capital or refinance its debt.

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Today in AMS: Bankruptcy Court asked to stop publisher claims

So reads the headline on Peg Brickley‘s report for Forbes (picked up by the newswires late yesterday) as Advanced Marketing Services asked a Delware bankruptcy court on Monday to put the brakes on moves by publishers to reclaim millions of dollars in unsold inventory. The company filed a promised motion seeking court permission to set up procedures to sell itself or refinance its senior debt, a counterattack to most of AMS’s major creditors – ranging from Random House, Simon & Schuster and those under Publishers Group West‘s distribution umbrella – invoking so-called “reclamation rights”, or special protections for some suppliers in Chapter 11 bankruptcy.

Though AMS has filed the motion to stem off possible lawsuit threats by publishers determined to reclaim their goods, it’s telling that no specific reclamation deal is described, no buyer or investor is named in AMS’s motion, and no date has been set for a hearing on the transaction procedures. If this is AMS’s opening gambit, then the next move belongs to rightfully aggrieved publishers – but one suspects that very move is forthcoming in a matter of days.

Today in AMS: PGW’s Official Statement; Publishers Unite to Fight

Yesterday afternoon Publishers Group West President Rich Freese sent out a statement to all PGW publishers outlining the distributor’s position in the wake of Advanced Marketing Services‘ Chapter 11 bankruptcy filing, and what it means for the future of its more than 150 publisher clients. The most important points of the statement:

  • PGW filed a motion on January 5 filed with the court seeking approval to give PGW publishers “Critical Vendor” status and have asked the court to allow PGW to make payments totaling the amounts due from PGW to PGW publishers in January 2007. “We believe that Critical Vendor designation is a significant step for PGW publishers and expect this motion to come before the court during a hearing on January 24th,” says Freese.
  • Contradicting statements in the media and the blogosphere, “PGW publishers are the owners of their inventory held by PGW in its warehouses in accordance with our contractual relationships.
  • Finally, Freese wants “to reiterate that neither AMS nor PGW have ever pledged the PGW publishers’ inventory held in PGW’s warehouses against our credit line. Accordingly, the bank excludes the PGW publishers’ inventory from its calculations against the borrowing base.”

More updates are pending, as are weekly COD checks to each publisher post-petition.

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