Actually, even Private Frazer didn’t think it would really happen, but Reader’s Digest UK has gone into administration.
Although this may allow RDA to offload its pension obligations to the Pensions Protection Fund, it isn’t actually clear that this will mean that the magazine continues.
The significant sentence in the RDA press release was this:
… the UK business has been operating with negative free cash flow, and without … restructuring the corporation did not see a clear pathway to profitability in the UK over the next several years.
Negative free cash flow means that more money was leaving RDA UK than was coming into it. How much of that was due to payments into the pension fund and how much was due to underlying weakness of the company will only fully come to light once the administrators put a prospectus together.
Private F,
I can tell you that the money RD UK has been losing was all down to the pension fund shortfall. Making up the shortfall was costing more than the healthy annual profits.
Comment by Mr Ed — March 11, 2010 @ 8:33 am |