A group of creditors is set to take over Vice Media Group with a $350 million offer, a little over a month after the US digital media company filed for bankruptcy.
Led by Fortress Investment Group, the creditors had initially offered $225 million for the youth-focused media outlet, but a court filing Thursday showed it had been upped to $350 million.
Vice Media Group's co-CEOs, Bruce Dixon and Hozefa Lokhandwala, told staff they will recommend the bid by Fortress, Soros Fund Management and Monroe Capital to a specialized federal court in New York on Friday, according to an internal staff memo seen by AFP.
The $350 million figure represents just five percent of Vice's reported 2017 valuation of around $5.7 billion, marking a sharp turnaround in fortunes.
At the time, Vice embodied a new generation of digital media company, which some saw as revolutionizing the sector at the expense of the established print and broadcast players.
But many digital media startups were unable to convert enthusiasm for their brand into the kinds of revenues that investors had projected.
A slowdown in the online advertising market and recent tightening of credit conditions have made the situation increasingly challenging for relatively young media companies like Vice.
BuzzFeed, another former leader in the digital media space, announced in April the closure of its news wing, and the layoff of 180 employees.
Vice's sale, which must next be approved by a federal judge, will help bring the firm out of Chapter 11 bankruptcy.
It will also allow the three investment firms to convert their debt into equity, even if that means giving up some of their funds in the process.
"Under new ownership, we look forward to a new chapter in VMG (Vice Media Group) history, with a renewed focus and commitment to creating world-class content for audiences and partners," the two executives wrote in their email to staff.
Another company, GoDigital Media, had put in a $300 million bid for VMG, more than the creditors' initial $225 million offer, but was rejected because it did not include a sufficient proportion of cash, according to an individual with knowledge of the offer.
GoDigital Media felt the cash request was both unreasonable and unfair, according to the individual, who requested anonymity to discuss the rejected bid.