AILING directories publisher Yell is sounding out its shareholders for a rights issue of up to £500m, it emerged yesterday, as the company seeks to refinance its £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 />“The refinancing will happen,” one source said, “but the process will go through the autumn”. <br /><br />Yell’s market value has gone up to £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 £3.5bn of loans due to repay initially, and a further £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’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’s chief executive, John Condron, is leading the talks.