views

Yell in 500m fundraising

STRUGGLING publisher Yell said yesterday it plans to raise at least &pound;500m through a rights issue as it attempts to repay its &pound;3.8bn debt-pile.<br /><br />The Yellow Pages publisher has been in discussions with its creditors since June about its debt repayments, and confirmed yesterday that its proposals now had the backing of &ldquo;a significant proportion&rdquo; of its largest lenders.<br /><br />It added that it intends to repay &pound;300m more within 18 months, by issuing a high-yield bond and potentially extending the size of the new share sale.<br /><br />The plans will be presented to all Yell&rsquo;s lenders next week &ndash; with a response expected by mid-October &ndash; after which a decision on the size of the share sale will be agreed with shareholders. <br /><br />If the proposals are agreed, Yell will pay a margin of 3.5 to 4 per cent above the London inter-bank lending rate (LIBOR) &ndash; a small increase on the current three per cent rate &ndash; and extend its debt maturities to 2014.<br /><br />Yell &ndash; which is battling an advertising slump as well as negotiating a structural shift from print to online publishing &ndash; has a market capitalisation of about &pound;583m, compared to its nearly &pound;4bn in debt. Its refinancing proposals would bring that debt down to &pound;3bn.<br /><br />The company also said second-quarter revenues were 17 per cent lower year-on-year, in line with guidance, and that it does not &ldquo;anticipate any significant improvement in the rate of revenue decline&rdquo; this year. <br /><br />Yell shares, which have more than trebled in value over the last two months on hopes the company would clinch a refinancing deal, closed 13.5 per cent lower at 64.4p.