Forbes Media recently found itself in technical default, and while the situation has improved, the company is not out of the woods yet.
Fortune obtained the financial records for the company and found that the company hired Alvarez & Marsal—”a firm that works with companies in dire financial straits or in bankruptcy to restructure their businesses”—to help it figure out how to stay afloat.
The trouble started in 2006, when Elevation Partners purchased 45% of Forbes Media for $237.2 million. Of that amount, the Forbes family kept $107.4 while using another $100+ million to pay down debt.
Dramatic decreases in revenue—brought on by the recession and the larger struggles of the magazine industry—started soon after the deal. 2008 revenue missed the projected target by more than $50 million, while revenue in 2009 and 2010 was more than $150 million less than Forbes Media predicted at the time of Elevation Partners’ investment.
Slowly, the situation is improving. As Fortune finds, Alvarez & Marsal is gone after Steve Forbes stepped down as CEO and the company sold Investopedia and “met stipulated financial targets.” (Lenders including JP Morgan stipulated those three conditions were needed for the release of the law firm.)
The company returned to profitability in 2010, but most of that financial success came from drastic cost-cutting lead by Elevation partner Bret Pearlman. Still, Forbes Media’s spokespeople said they will be able to refinance the loan in July, 2012.
“It is not up to the banks whether to refinance,” a statement reads. “It is up to Forbes. [We] have numerous financing options as we go forward.”
The story is not over, and hopefully it can have a happy ending. (And for the Forbes heirs, it already has.)