Yellow Media reaches settlement to end recapitalization dispute

Yellow Media CEO Marc Tellier. The company today said it has reached a settlement with debenture holders that will see them drop their opposition against a proposed recapitalization deal in exchange for a larger piece of the company.
Yellow Media (TSE:YLO) says it has reached a settlement with debenture holders that will see them drop their opposition against a proposed recapitalization deal in exchange for a larger piece of the company.

The settlement was reached with existing convertible unsecured, subordinated debenture holders, who previously contested the company’s proposed recapitalization, which is necessary to reduce its $1.8 billion debt load.

As part of the settlement, the company agreed to amend the terms of the recapitalization such that holders will receive, in exchange for all entitlements relating to their convertible debentures, $2.5 million of senior subordinated exchangeable debentures and 200,000 additional warrants to purchase new common shares.

This is in addition to the 500,000 new common shares and 285,714 warrants that holders of convertible debentures were already entitled to receive under the recapitalization, as amended on September 4.

The company said that holders of affected senior unsecured debt will also get an additional $25 million of senior secured notes under the amended plan.

Yellow Media owns and operates a number of properties and publications including Yellow Pages print directories, YellowPages.ca, Canada411.ca and RedFlagDeals.com.

The company has been struggling with revenue in its printed Yellow Pages division, with digital revenue not climbing fast enough. The company says it needs to restructure to reduce its debt load, much of which is due in the next year.

Yellow Media also said today that as part of the deal, it would honor interest on debt due to the convertible debenture holders on October 1, and give them around $650,000 to cover legal expenses.

The hearing for the final approval by the Québec Superior Court of the recapitalization, including the amendments to reflect the settlement, is currently in progress.

Deborah Bacal
Proactive Investors
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