The publisher of Reader's Digest, the most popular US general-interest magazine, said Monday it will file for bankruptcy protection with a plan to swap a portion of its debt for ownership of the company. Reader's Digest Association Inc., owned by the New York private-equity firm Ripplewood Holdings since 2007, said Monday it has reached an agreement in principle with a majority of secured lenders to erase a portion of the $1.6 billion they hold in senior secured notes. The lenders will get ownership in return. The planned filing, which does not include operations outside the United States, comes amid declining circulation, an industrywide advertising slump and large debts. Reader's Digest, the monthly magazine founded in 1922 as a collection of condensed articles from other publications, has been searching for a niche as the Internet upends the magazine industry's traditional business models. This year's ad declines saw the closing of several high-profile titles including Conde Nast's Portfolio, Domino and Blender. In June, Reader's Digest announced it would cut the circulation guarantee it makes to advertisers to 5.5 million, from 8 million, and lower its frequency to 10 issues a year from 12. In the second half of last year, the US edition of Reader's Digest had circulation of 8.2 million, 2 percent above the guarantee to advertisers but 12% below circulation a year earlier. Its decision to adjust its rate base suggests expectations that circulation will drop further. The company said Monday it would skip a $27 million interest payment on its 9% notes due in 2017 while it looks to build support among lenders for its restructuring plans. In a statement, Reader's Digest CEO Mary Berner said the agreement follows "months of intensive strategic review of our balance-sheet issues." The agreement includes $150m. in "Debtor-in-Possession" loans to finance the company during bankruptcy protection. Overall, the company plans to shrink its debt from $2.2b. to $550m. following reorganization. It said the "vast majority" of suppliers would be paid in full under the bankruptcy plan. The company said it would seek further agreements from lenders and other stakeholders before making a formal bankruptcy filing within a month. Aside from Berner, all of the company's board members who have served since Ripplewood's $1.6b. acquisition of the company in 2007 have resigned. Two members who recently joined will continue to serve.