Yell investors put pressure on its lenders

AILING directories publisher Yell is sounding out its shareholders for a rights issue of up to &pound;500m, it emerged yesterday, as the company seeks to refinance its &pound;3.8bn debt mountain.<br /><br />But investors will only support an equity raising if banks agree to relax the terms of a debt repayment programme, it is understood.<br /><br />In June, the company said it would refinance its debt, and appealed to banks and shareholders to help with restructuring.<br /><br />In an update a month later, Yell said talks to restructure debt were on track, and its shares have risen over 50 per cent in the past week on talk a deal could be close.<br /><br />&ldquo;The refinancing will happen,&rdquo; one source said, &ldquo;but the process will go through the autumn&rdquo;. <br /><br />Yell&rsquo;s market value has gone up to &pound;574m, but massive debt still overshadows the company. <br /><br />Loan facilities at the company, which puts out the Yellow Pages phone directory, run out in 2011 and 2012. <br /><br />It has &pound;3.5bn of loans due to repay initially, and a further &pound;1.4bn due the next year.<br /><br />The group owes money to over 300 lenders, including HSBC, through debt racked up by acquisitions in Spain and the US.<br /><br />Confidence in Yell&rsquo;s ability to repay the money has hit the company hard, but the talks with investors is buoying hopes that a deal with shareholders and banks is achievable. <br /><br />Yell&rsquo;s chief executive, John Condron, is leading the talks.