American Media Inc. lenders have thrown the cash-strapped owner of the National Enquirer, US Weekly and OK! a financial lifeline to help it survive a sales slump brought on by the coronavirus pandemic, Media Ink has learned.

Some 90 percent of AMI’s second-lien bondholders, who hold an estimated $225 million of the publisher’s roughly $400 million total debt, have agreed to forgo their semi-annual interest payments until their bonds mature in 2023, sources said.

The deal gives the struggling publisher — known for its sordid feud with Amazon CEO Jeff Bezos — some breathing room by reducing its $36 million annual interest payments by roughly $20 million a year, sources said.

“It means they will basically get to skip about $10 million in cash interest payments [at the end of June], money which they don’t have,” said a source with knowledge of the company’s operations.

The coronavirus pandemic has crushed the publishing industry by squashing newsstand and advertising revenues. AMI, run by Donald Trump pal David Pecker, relies heavily on revenue from newsstand sales for the bulk of its income. And while the supermarkets and drugstores that carry its celebrity and fitness titles have largely remained open during the lockdowns, newsstand sales have plunged as more consumers turned to Amazon and other online retailers for more of their shopping needs.

The refinancing asks that lenders give up their second-lien bonds for what’s known as payment-in-kind, or PIK bonds. Sources said that the transfer was voluntary and only 90 percent of lenders agreed to do it, including Anthony Melchiorre-led hedge fund Chatham Asset Management, which is also the publisher’s majority stockholder, with an 80 percent stake.

American Media will eventually pay these bondholders back at a 13 percent interest rate, above the current rate of 10.5 percent, one investor source said, although a source close to Chatham disputed this saying the rate has come down to closer to 10 percent.

Sources say Chatham owns 40 percent to 50 percent of the total second-lien bonds outstanding, all of which will be swapped for PIK bonds.

Hedge fund manager Leon Cooperman, whose Omega Partners owns less than 10 percent of AMI’s stock, didn’t agree to go along with the swap as his AMI bonds are used to fund his charitable causes, sources said.

American Media might have been better positioned to withstand the pandemic had its $100 million deal to sell the National Enquirer closed before the coronavirus crisis crushed its sales.

The company agreed to sell the Enquirer and several smaller supermarket tabloids in April 2019 to James Cohen, who runs the magazine wholesale distributor Hudson News. But the deal has been stuck in limbo for over a year now, despite Cohen’s insistence that it’s on track to close.

Even before its sale to Cohen, AMI was scrambling to raise cash, including a refinancing 18 months ago that helped it stretch out its payments on about $460 million in long term debt. In February, the company raised millions to pare down some of that debt by selling its bodybuilding trade show, Mr. Olympia, and bodybuilding magazines Muscle & Fitness, Flex and Muscle & Fitness Hers to an Arizona businessman. Terms were not disclosed, but sources at the time said the sale raised $70 million.

When the pandemic hit in March, the company slashed salaries by 23 percent. In April it laid off much of its RadarOnline digital operation — a joint venture with Ron Burkle’s Yucaipa Cos. It has axed staff at other digital operations and more recently laid off about six people at its Boca Raton, Fla., headquarters, which now employs about 35 people.

Rumors recently swirled that the company might make even deeper cuts and close the Florida office, but AMI denies this. “Absolutely not true,” said a spokesman.

The spokesman declined to comment on the bond restructuring other than to say, “All bond interest payments have been made and will be made.” Chatham and Cooperman’s hedge fund also declined to comment.

American Media Inc. made headlines last year when Bezos, the richest man in the world, accused the Pecker-run company of attempted extortion for using private selfies shared between Bezos and his girlfriend, Lauren Sanchez. Bezos said AMI executives threatened to publish the photos unless he issued a statement disavowing that the publisher’s reporting has been “politically motivated or influenced by political forces.”

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