BY Fraser Tennant
Amid growing financial strain, US direct to consumer marketing company Publishers Clearing House (PCH) has filed for Chapter 11 bankruptcy protection in order to reorganise its capital structure and improve its long-term growth trajectory.
According to the court filing, PCH entered bankruptcy with $490,000 in cash and approximately $40m in debts to employees, vendors, service providers and landlords after a years-long decline in its legacy direct mail marketing business.
The company intends to use the financial restructuring process to finalise its shift away from these legacy businesses to focus on its transformation to a pure digital advertising business.
To fund operations without disruption, PCH has lined up debtor-in-possession financing which, subject to court approval, the company anticipates will provide liquidity to support operations during the reorganisation process.
As part of this process, PCH has also engaged advisers to explore a variety of strategic options, including the potential sale of its digital assets or a capital infusion from a financial partner that will help fund the company’s longer-term business plan going forward.
“By taking these steps, we are breaking free from the past financial constraints of our legacy direct mail and online retail merchandise and magazine subscription operating model,” said Adam Goldberg, chief executive of PCH. “This action establishes a strong foundation for our future – enabling PCH to unlock the full potential of its digital advertising and consumer insights business.”
PCH’s renowned Prize Patrol team is expected to continue during the restructuring process, awarding prizes to sweepstakes winners across the US with the famous big cheque, champagne and flowers that have endeared the PCH brand to consumers for over 50 years.
“Our world-renowned sweepstakes will continue to be a cornerstone of our experiences,” added Mr Goldberg. “We intend to continue offering free-to-play entertainment and awarding prizes in the ordinary course of business during and after this process to uphold the historic legacy of PCH.”
Throughout the restructuring process, PCH is committed to operating in a business as usual manner in order to continue delivering for its valued customers, partners, clients and employees.
Mr Goldberg said the Chapter 11 filing “marks a crucial development in PCH’s transition to a digital advertising-supported entertainment company”.
News: Sweepstakes company Publishers Clearing House goes bankrupt