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Credit Suisse is seeking withdrawal from debt deal with owner of National Enquirer
[NEW YORK] Credit Suisse Group AG is having second thoughts about doing business with the owner of the National Enquirer, which is at the center of a scandal involving hush-money payments in 2016 to women who had affairs with Donald Trump.
The Swiss bank was planning to lead a deal to help American Media Inc refinance about US$425 million of debt, according to people with knowledge of the matter. But amid a flurry of negative headlines tied to the publisher, Credit Suisse is seeking to back out of arranging the debt for the company, the people said, asking not to be identified as the information isn't public.
Representatives for Credit Suisse and American Media declined to comment.
American Media allegedly made "catch and kill" deals to help keep Mr Trump's affairs out of public view before he was elected U.S. president. Last week, Mr Trump's personal lawyer, Michael Cohen, pleaded guilty to criminal charges and said the New York-based company knew about or played a role in payments before the presidential election to two women who had had affairs with Mr Trump more than a decade ago. The payments were directed by Mr Trump and amounted to illegal campaign contributions, Mr Cohen claimed.
American Media Chairman David Pecker has been granted immunity by prosecutors to provide information in the case, according to a person familiar with the matter. On Tuesday, he stepped down from the board of Postmedia Network Canada Corp., a Canadian newspaper company.
America Media had about US$900 million of borrowings, with all of it coming due within the next five years, according to documents seen by Bloomberg. The company has lost US$224.4 million over the last five years and it had US$1.5 million of cash on its balance sheet as of March.
The financials also show purchases of publications such as Us Weekly and Men's Journal have failed to boost operating income, which fell to US$18.8 million for the fiscal year ended March, a 27 per cent drop from two years earlier. Total circulation for the company's flagship publication, National Enquirer, slid 18 per cent to 265,000 in the last fiscal year from the year earlier period.