Yell investors put pressure on its lenders
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.
But investors will only support an equity raising if banks agree to relax the terms of a debt repayment programme, it is understood.
In June, the company said it would refinance its debt, and appealed to banks and shareholders to help with restructuring.
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.
“The refinancing will happen,” one source said, “but the process will go through the autumn”.
Yell’s market value has gone up to £574m, but massive debt still overshadows the company.
Loan facilities at the company, which puts out the Yellow Pages phone directory, run out in 2011 and 2012.
It has £3.5bn of loans due to repay initially, and a further £1.4bn due the next year.
The group owes money to over 300 lenders, including HSBC, through debt racked up by acquisitions in Spain and the US.
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.
Yell’s chief executive, John Condron, is leading the talks.