Yell falls as it commences talks on debt

SHARES in Yell Group dropped yesterday after it said that it had started talks over the restructuring of its &pound;4bn debt &ndash; just eight months after it renegotiated its covenants &ndash; and reported worsening trading conditions.<br /><br />The struggling Yellow Pages publisher said that falls in revenues and core profit were accelerating, and that it planned to extend the maturity and change the terms of its debt facilities, a process it expected to take until the autumn.<br /><br />&ldquo;The total volume of advertising industry spend has shown marked declines across all media in each of the regions in which the group operates,&rdquo; Yell said.<br /><br />The company said second-quarter revenues were expected to fall by about 17 per cent, after an expected 11 per cent decline in the current quarter. It also said profits will be down 20 per cent in the first quarter and 30 per cent in the second quarter.<br /><br />However, the company reiterated yesterday that its cash flow and conversion remained strong enough to make further debt repayments as well as interest payments.<br /><br />The publisher announced last month that it had appointed Bob Wigley &ndash; ex-chairman of Merrill Lynch&rsquo;s Europe, Middle East and Africa operations &ndash; as its new group chairman, starting 24 July. The appointment came as Yell sought to reassure investors over the stability of its balance sheet.