The future of PGW has become more complicated now that National Book Network has made a bid "to acquire PGW by assuming its
publisher contracts," as a letter from NBN to PGW publishers put it.
The distributor is offering 85% of the money owed the publishers from
brankrupt AMS, will require publishers to extend contracts by three years, will
keep a PGW office in California and aims to "find a role for as many
PGW reps as possible" as well as for its marketing staff.
NBN president Jed Lyons told Shelf Awareness that in the day
since he had sent the letter, "we've been inundated with publishers.
We're furiously taking calls and making calls." He called the offer
"pretty straightforward" and thought it would be more attractive to
most publishers than the offer made by Perseus. "We're offering 15 cents per dollar
more and a three-year rather than a four-year commitment," he stressed. He
added that because the offer is made as an unsecured general claim, it would save the AMS "estate"
money. By contrast, Perseus's administrative claim would get priority and "come right off
the top of the estate before anyone gets a dime."
Several smaller PGW publishers have expressed interest in the NBN
offer. One publisher told Shelf Awareness that he had already wanted to
sign up with NBN and is "delighted." RadioFreePGW
has also expressed,
shall we say, a preference for NBN over Perseus and wrote last night
that PGW was making a plea for Perseus (despite the tone of an earlier
letter quoted below).
Perseus,
which is buying Avalon, PGW's largest publisher, and has the support of
Grove/Atlantic, told the Wall Street Journal that it has already
"signed contracts or reached oral agreement with publishers
representing at least 60% of the total claims of PGW clients." And last
night Perseus CEO David Steinberger issued the following statement:
"We continue to be focused on finalizing the path forward for PGW's
independent publishers, which includes making a significant payment to
them quickly and ensuring no disruption in service. We also remain
concerned about the PGW employees and the need to give them some
clarity and certainty about the future. As far as we can see, the other
offer being introduced this late in the process isn't real yet and may
never be. We deeply appreciate the support we continue to receive from
PGW publishers and PGW staff, so many of whom are working along side us
to get our plan approved so that we can all get past the uncertainty
and turmoil of the past six weeks and get back to focusing on the
books."
Lyons's letter indicated the Maryland distributor has the financial
support of Drawbridge Long Dated Value Advisors of New York. Worldwide
the company had net sales in 2006 of $100 million. At the moment, NBN
has a 20-member sales force and 25 commission reps in North
America. Five reps cover non book trade markets. If NBN's bidding is
successful, the company will "combine the two sales organizations into
one."
It is unclear about how much choice publishers have, particularly
those who have already signed with Perseus. In a letter to PGW
publishers introducing the NBN bid, PGW president Rich Freese said that
because the AMS bankruptcy court "has not yet approved any deal, you
are free to enter into an agreement with NBN, even if you have done so
with the other potential purchaser [i.e., Perseus]. The intent of the
process is that the bankruptcy court will approve a transaction and the
agreements with the 'winning' purchaser will be valid and enforceable."
An NBN alumnus, Freese continued, "I know that NBN appreciates PGW's
close relationship with our customers and will undoubtedly maintain the
high level of service and reliability that you have come to expect from
PGW."