Vice Media files for bankruptcy as advertising business suffers

May 15 (Reuters) – Vice Media Group, famous for websites such as Vice and Motherboard, filed for bankruptcy protection on Monday, citing its sale to a group of creditors amid financial problems and top-executive departures.

The bankruptcy filing is the culmination of a challenging period for many tech and media companies, which have cut costs to survive a weak advertising market amid a slowdown in economic growth.

A consortium of lenders that includes Fortress Investment Group, Soros Fund Management and Monroe Capital will offer about $225 million in debt for all of its assets and assume significant liabilities at closing, Weiss said.

Under a credit bid, creditors can swap their secured debt for the company’s assets instead of paying cash. Wise lists both assets and liabilities between $500 million and $1 billion.

“Lenders are taking it (Vice) at a steep discount, and we’ll see if they can become viable with a much leaner capital structure coming out of bankruptcy,” said Thomas Hayes, president of investment firm Great Hill Capital.

Vice was among a group of fast-growing digital media ventures that once had rich ratings as they attracted thousands of viewers. It rose to prominence with its co-founder Shane Smith, who built his media empire from a Canadian magazine.

Wise has received commitments and approvals from lenders to use more than $20 million in cash, which it said will be “more than adequate” to fund its business through the sale process.

The company said on April 27 that it was canceling the popular TV show “Vice News Tonight” as part of a broader restructuring of its news division. A week before that, BuzzFeed Inc ( BZFD.O ) said it was closing its news division.

“This climate and the difficult equity raising environment due to high rates is putting some of the smaller players out to pasture,” Hayes said.

Reporting by Rahat Sandhu in Bangalore; Editing by Uttaresh Venkateshwaran

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