Honey and Savoy magazines, the hot urban publications shut down in November when parent Vanguarde entered Chapter 11, are set to resume publishing within a few weeks.
  “It’s our current intention to get Honey and Savoy cranked up as soon as possible,” according to the person overseeing Vanguarde’s restructuring, Joe Sarachek, managing partner at Triax Capital Advisers. “The market seems to have real interest in a standalone reorganization.”
   The two magazines will then be put on the block for sale.
  The company’s third title, Heart & Soul, will not resume publishing but could end up being sold, at least in name, as part of a deal involving the two active titles, or sold separately.
   “We’re entertaining offers to purchase all or some of the assets,” Sarachek acknowledges. However, he says, “absent some party coming in and paying a healthy price, we’re pursuing a reorganization.”
   Started in 1999 with the acquisition of Honey from Harris Publications, Vanguarde appeared to be doing quite well for most of last year, with its titles posting advertising and audience gains. Its abrupt shutdown in November, after the company had tried and failed to secure an additional $10 million in funding, came as a surprise.
  Whatever the eventual outcome, it’s in Vanguarde’s interest to hustle Honey and Savoy back into print ASAP, says Mark Edmiston, managing director at the media investment firm AdMedia Partners.
   “If they’re sitting there not being published, the value diminishes rather rapidly,” he says. “It’s one reason why few publishing companies ever come out of Chapter 11.”
  Assuming Vanguarde hangs onto Savoy and Honey, the company will be run by a management team drawn from the ranks of current Vanguarde executives, including executive vice president Bo Kemp and finance chief Steve Spitzer. 
   Keith Clinkscales, Vanguarde’s founder and chairman, won’t be part of the reorganization but will pursue his own independent bid for the company’s assets.
    Clinkscales, who co-founded Vibe magazine before starting Vanguarde in 1999, says the magazines were approaching the breakeven point when he was forced to shut them down.
    “We just ran out of runway,” he says. “Each was fairly close to being marginally profitable. We had good support from the ad community. We just couldn’t close the cost gap quickly enough to get ourselves to profitability.”
   Indeed, unlike so many titles that have folded over the past three years, Vanguarde’s magazines had been gaining, not losing, advertising. 
   All three titles were up in ad pages last year, with Heart & Soul posting the biggest gain: a 42 percent jump in pages, to 477.8, through November, according to PIB. Savoy’s pages were up 20.7 percent, to 513.4, while Honey’s were up 4.9 percent, to 551.1.
   Together, the three titles were generating revenue of approximately $30 million – a total that should have been enough to see Vanguarde into the black.
   “Ordinarily, I would have expected a company to be profitable at that point,” says Reed Phillips, managing partner at DeSilva & Phillips.
   “If they can restructure their debts and lower their cost structure, they might be in a position to run the business profitably,” he says.
   Phillips notes a caveat, however.
   “All the news about going through bankruptcy may impact their revenues to such a degree that it will be hard to rebound.”
   Triax will concentrate on cutting out costs by cutting Vanguarde’s staff from its previous level of around 70, says Sarachek.
   “We’ve greatly pared down the personnel that we see would be involved,” he says. “We don’t think we’ll lose any content value by doing that.”
    Should it come to a sale of all three titles, potential bidders would include Time Inc., which bought a 49 percent stake in Essence in 2000, Johnson Publishing, which owns Ebony and Jet, and American Media, which is always on the lookout for acquisitions and has put together a Spanish-language media group.
   Splitting off Heart & Soul is logical, says Edmiston, noting that it is less of a pure black-interest magazine than the others. It's also the only one of the three to lose circulation in the first half of 2003. 
   Edmiston says he would expect to see a lot of interest in a full-scale auction. 
   “Urban is one of the hotter areas right now. It’s a vibrant market.”