September 06, 2012

Yellow Media Moves Forward With Recapitalization

Yellow Media

Canadian multi-media giant Yellow Media announced that it will move forward with its recapitalization efforts.  The proposal was approved by the requisite number of shareholders and the company’s debt holders in meetings held on September 6, 2012 in Montreal.  Yellow Media announced its intent to recapitalize its debt on July 23, 2012.  

“We are pleased with the results of the vote” said Marc P. Tellier, Yellow Media’s President and Chief Executive Officer. “The approval by the debt holders and shareholders represents a significant milestone towards the completion of the recapitalization.”

Recapitalization is the process of exchanging one form of financing for another and is most often executed with the goal of making a company’s capital structure more stable.  Approximately 44 percent of the company’s current debt load is set to mature in the next 18 months.  Yellow Media is seeking to recapitalize its debt in order to give it some “breathing room” as it strives to transform itself into a digital media company in the midst of a decline in its print Yellow Pages business.  The recapitalization efforts will save Yellow Media $45 million a year in interest payments and reduce its debt from $1.8 billion to $850 million.

Key components of the initiative include:

1)     Exchange of its credit facilities and medium term notes (the “Senior Unsecured Debt”), representing $1.8 billion of the Company’s debt, for a combination of:

  • $750 million of 9 percent Senior Secured Notes due in 2018
  • $100 million of Subordinated Unsecured Exchangeable Debentures due in 2022, with interest payable in cash at 8.0 percent or in additional debentures at 12 percent
  • 82.5 percent of the New Common Shares

2)     Holders of existing convertible debentures, preferred shares and common shares of the Company to receive in exchange for their securities a combination of:

  • 17.5 percent of the New Common Shares
  • Warrants, representing in the aggregate 10 percent of the New Common Shares;

Yellow Media has stated that the recapitalization will not impact customers, suppliers or any other business partners.  The implementation of the recapitalization is expected to occur by the end of September 2012 subject to a number of conditions, including the receipt of the final approval by the Québec Superior Court, and to other risks and uncertainties.

Yellow Media owns and operates Yellow Pages print directories, YellowPages.ca, Canada411.ca and RedFlagDeals.com.  The company’s online properties reach an estimated 8 million monthly unique visitors. 

For more information, visit www.ypg.com

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