Ziff Davis Will Have About $25 Million in Additional Capital to Work With in Q3

According to the terms of the 12% notes, Ziff Davis has to use about 80% of the proceeds from asset sales to pay off senior debt, which, at this point, is the 12% notes. The company can apply for a waiver on this payment if it wants to reinvest the money, but I doubt that this will happen. So, after ZD gets the full $150 million from the sale, it will have about $25 million left over after applying the money to various debt payments.

This is good news for the company. Add that $25 million to the “for sale” war chest. If ZD can exceed expectations on the sale on one of its remaining two divisions, it might have enough cash to pay off its substantial February 2008 coupons.

I’ve also read some reports that bond analysts believe that the sales process will now gain momentum since the enterprise group is out of the way. And, considering that enterprise exceeded valuation, without any adjustment to the valuations of the other groups, Willis seems like it will be able to net about $370 million from the sale. If the other groups exceed expecatations…well, Willis might be able to get out of this without dipping back into its own pockets.

Think back to the 90s, when the prescient Bill Ziff sold the company for just over $2 billion. And, let’s not forget, that, excluding refinancing and capital it pumped into the business, Willis Stein bought the company for $780 million in 2000; which, I guess, makes one thing clear: it’s bath time.