(Adds analyst comments in paragraphs 5 and 9)
By Samrhitha A and Rahat Sandhu
May 15 (Reuters) - Vice Media Group, popular for
websites such as Vice and Motherboard, filed for bankruptcy
protection on Monday to engineer its sale to a group of lenders,
capping years of financial difficulties and top-executive
departures.
The bankruptcy filing is a fallout of a challenging period
for many technology and media companies that have been cutting
costs to survive a weak advertising market amid slowing economic
growth.
Vice said the lender consortium that includes Fortress
Investment Group, Soros Fund Management and Monroe Capital will
provide about $225 million in credit bid for almost all of its
assets and also assume significant liabilities at closing.
Under a credit bid, creditors can swap their secured debt,
rather than pay cash, for the company's assets. Vice listed both
assets and liabilities in the range of $500 million to $1
billion.
"Creditors are taking it (Vice) over at a steep discount and
we will find out whether they can become viable with a much
slimmer capital structure coming out of bankruptcy," said
Thomas Hayes, chairman at investment firm Great Hill Capital.
Vice was among a group of fast-rising digital media
ventures that once had rich valuations as they courted
millennial audiences. It rose to prominence alongside 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 fund its business through the sale
process.
The company had on April 27 said it would cancel popular TV
program "Vice News Tonight" as part of a broader restructuring
of its news division. A week before that, BuzzFeed Inc said it would shutter its news division.
"This climate coupled with a difficult equity raising
environment due to higher rates is taking some of the smaller
players out to pasture," Hayes said.
(Reporting by Rahat Sandhu and Samrhitha Arunasalam in
Bengaluru; Editing by Uttaresh Venkateshwaran and Arun Koyyur)
