Yell forced to extend debt plan deadline
By Rupert Neate
Published: 10:34PM GMT 27 Oct 2009
However, the shares gained ground later in the day to close up ½p – almost 1pc – at 52½p as investors gained confidence that the publisher of the Yellow Pages is getting closer to agreeing terms with its 300-plus lenders.
The shares, which lost 10pc on Tuesday, have fallen by 29pc since it announced the plan to refinance its £3.8bn debt in September.
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Yell said it had extended the deadline for lenders to agree to its proposals to 5pm today, after it failed to secure a deal by its original deadline of 5pm on Monday.
The media group, which is advised by Deutsche Bank and JP Morgan Cazenove, said the deal has been delayed by the difficulty of securing the backing of such a large lending syndicate. It is understood that the process has been complicated further by about 1pc of lenders being legally required not to vote in favour of the plans.
The company will be forced to ask the courts to enforce its plans if lenders do not agree to its proposals.
Bankers advising on the refinancing said they expect the final remaining lenders to sign up to the scheme before today’s deadline.
Paul Richards, an analyst at Numis, said: “Having delayed for a week, to then come out and say, ‘We are delaying for two days’ is very specific. I think the group must have very high confidence that it will get there on Wednesday.”
Yell, which has been hit by a slump in advertising, plans to reduce its debt to £3.3bn with a £500m equity raising. It then hopes to pay off a further £300m within 18 months.
The directories publisher is offering its lenders a more favourable interest rate on the debt in exchange for their consent to extend its debt maturities until 2014.
Many of Yell’s debts result from a spree of acquisitions, including the €3.3bn (£2.3bn) spent buying its Spanish directories business in 2006.