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It was among the largest and fastestgrowing direct marketing companies in the United States. And now it has filed for bankruptcy, falling victim to its own overexpansion.
Atlanta-headquartered DIMAC Holdings Inc., along with eight of its subsidiaries, filed for Chapter 11 protection the first week of April in Delaware, where DIMAC was incorporated.
DIMAC and its subsidiaries provide integrated direct marketing services to their customers, including market research, direct mailing and creative services. The company operates a nationwide network of 22 direct mail and production facilities, two corporate facilities and various sales offices throughout the United States. The company mails approximately 1.7 billion direct mail pieces each year.
Key customers have included AT&T Corp., American Express Co. and Chase Manhattan Bank among others. Many public television stations also do business with the company.
The company had grown rapidly through acquisitions, and revenues peaked at $378 million in 1998. To finance this growth, DIMAC borrowed money at a lending rate higher than the current prime rate, one of the reasons leading to the bankruptcy.
According to court records, the company had liabilities of $471 million while assets totaled $498 million, a significant amount of which is "goodwill" (reflecting the value of a company's name, brand and reputation), which may not have much value when the company is bankrupt.
Although the size of the debt restructuring is still not...