Yell in 500m fundraising
STRUGGLING publisher Yell said yesterday it plans to raise at least £500m through a rights issue as it attempts to repay its £3.8bn debt-pile.
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 “a significant proportion” of its largest lenders.
It added that it intends to repay £300m more within 18 months, by issuing a high-yield bond and potentially extending the size of the new share sale.
The plans will be presented to all Yell’s lenders next week – with a response expected by mid-October – after which a decision on the size of the share sale will be agreed with shareholders.
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) – a small increase on the current three per cent rate – and extend its debt maturities to 2014.
Yell – which is battling an advertising slump as well as negotiating a structural shift from print to online publishing – has a market capitalisation of about £583m, compared to its nearly £4bn in debt. Its refinancing proposals would bring that debt down to £3bn.
The company also said second-quarter revenues were 17 per cent lower year-on-year, in line with guidance, and that it does not “anticipate any significant improvement in the rate of revenue decline” this year.
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.