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Lenders take control of debt-ridden Yellow Pages Lenders take control of debt-ridden Yellow Pages
(2 months later)
The walking fingers logo of Yellow Pages has been seized by its lenders after the famous directory company finally gave up battling against its £2.3bn debt mountain.The walking fingers logo of Yellow Pages has been seized by its lenders after the famous directory company finally gave up battling against its £2.3bn debt mountain.
The publisher of Yellow Pages, once ranked in the FTSE 100 list of Britain's biggest companies, was on Thursday forced to tell shareholders their stakes were worthless.The publisher of Yellow Pages, once ranked in the FTSE 100 list of Britain's biggest companies, was on Thursday forced to tell shareholders their stakes were worthless.
The Yellow Pages were spun out of BT as Yell and sold to private equity companies for £2.1bn in 2001. The company was floated on the stock market at 285p a share in 2003, reached a peak of 640p in 2007.The Yellow Pages were spun out of BT as Yell and sold to private equity companies for £2.1bn in 2001. The company was floated on the stock market at 285p a share in 2003, reached a peak of 640p in 2007.
But in order to fund ambitious growth, Yell had been saddled with billions of pounds of debts. When the financial crisis struck its revenue from advertising collapsed and it was unable handle its interest payments.But in order to fund ambitious growth, Yell had been saddled with billions of pounds of debts. When the financial crisis struck its revenue from advertising collapsed and it was unable handle its interest payments.
The company, which changed its name to Hibu – a name it admits is meaningless – on Thursday agreed to hand over ownership of the business to its lenders, including the hedge fund of veteran investor George Soros.The company, which changed its name to Hibu – a name it admits is meaningless – on Thursday agreed to hand over ownership of the business to its lenders, including the hedge fund of veteran investor George Soros.
Bob Wigley, Hibu's chairman and a former Merrill Lynch banker, said: "This has been a very demanding year for the group with some difficult and painful decisions made."Bob Wigley, Hibu's chairman and a former Merrill Lynch banker, said: "This has been a very demanding year for the group with some difficult and painful decisions made."
Wigley, a former UK ambassador for business, told shareholders in an open letter the board had "strongly argued" their rights but that lenders would only agree to a structure that did not permit any payment to shareholders.Wigley, a former UK ambassador for business, told shareholders in an open letter the board had "strongly argued" their rights but that lenders would only agree to a structure that did not permit any payment to shareholders.
"Given the burden of high historic debt levels and short maturity of our existing loans, lender control of Hibu was unavoidable," he said."Given the burden of high historic debt levels and short maturity of our existing loans, lender control of Hibu was unavoidable," he said.
Wigley said the deal, which will see £800m of Yell's £2.3bn debt written off and the company delisted from the London Stock Exchange, will safeguard 12,000 jobs.Wigley said the deal, which will see £800m of Yell's £2.3bn debt written off and the company delisted from the London Stock Exchange, will safeguard 12,000 jobs.
"While I fully recognise that it will be of no consolation to you in your capacity as a shareholder, we will have secured the future of the group, safeguarded the jobs of our 12,000 employees and laid the foundations for a sustainable transformation to a digital business with global capability," he said."While I fully recognise that it will be of no consolation to you in your capacity as a shareholder, we will have secured the future of the group, safeguarded the jobs of our 12,000 employees and laid the foundations for a sustainable transformation to a digital business with global capability," he said.
However, Alex DeGroote, an analyst at Panmure Gordon, said he expects the new owners to cut a lot of jobs. "I think it will be carnage. They'll take lots of heads out," he said. "I think the business will be pared right back and the focus will be on generating as much cash as possible."However, Alex DeGroote, an analyst at Panmure Gordon, said he expects the new owners to cut a lot of jobs. "I think it will be carnage. They'll take lots of heads out," he said. "I think the business will be pared right back and the focus will be on generating as much cash as possible."
Yell's shares were suspended on Thursday and subject to formal agreement all the equity in a new group holding company will be owned by the lenders.Yell's shares were suspended on Thursday and subject to formal agreement all the equity in a new group holding company will be owned by the lenders.
The agreement came after negotiations with lenders owning 32.8% of the company's debt, and still requires approval by those holding a further 75%. Shareholder approval is not required.The agreement came after negotiations with lenders owning 32.8% of the company's debt, and still requires approval by those holding a further 75%. Shareholder approval is not required.
Hibu, which had delayed the publication of its full-year results until it had agreed a debt restructuring plan, revealed a £2bn pre-tax loss for the 12 months to 31 March.Hibu, which had delayed the publication of its full-year results until it had agreed a debt restructuring plan, revealed a £2bn pre-tax loss for the 12 months to 31 March.
Revenue fell by 16% to £1.3bn, with digital services growing by 34% but digital directories revenues down 12% and print directory revenues down 22%. Yellow Pages advertisers fell 16% in the full year to 868,000, while revenue per advertiser dropped 6% to £923.Revenue fell by 16% to £1.3bn, with digital services growing by 34% but digital directories revenues down 12% and print directory revenues down 22%. Yellow Pages advertisers fell 16% in the full year to 868,000, while revenue per advertiser dropped 6% to £923.
Mike Pocock, Hibu's chief executive, said: "The market remained difficult for all of our directories businesses. Despite growing or maintaining our market share, industry-wide declines have continued to drive significant earnings pressure and further reduction in the value of our print brands."Mike Pocock, Hibu's chief executive, said: "The market remained difficult for all of our directories businesses. Despite growing or maintaining our market share, industry-wide declines have continued to drive significant earnings pressure and further reduction in the value of our print brands."
First published as a classified section in Brighton in 1966, Yellow Pages was rolled out across the country seven years later and became a ubiquitous – if weighty – feature of British households.First published as a classified section in Brighton in 1966, Yellow Pages was rolled out across the country seven years later and became a ubiquitous – if weighty – feature of British households.
Its best-known TV advertising campaign, in 1983, featured a fictional author, JR Hartley, using the directory to search through antiquarian booksellers for a copy of his book Fly Fishing. The campaign epitomises the challenge faced by parent company Hibu three decades on, as it tries to keep the directory relevant in an age when most consumers will go online when searching for hard-to-find products.Its best-known TV advertising campaign, in 1983, featured a fictional author, JR Hartley, using the directory to search through antiquarian booksellers for a copy of his book Fly Fishing. The campaign epitomises the challenge faced by parent company Hibu three decades on, as it tries to keep the directory relevant in an age when most consumers will go online when searching for hard-to-find products.
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