Telecomunicaciones y tecnología

Outlook black for Yellow Pages group Yell

By Brenton Cordeiro

(Reuters) - Phone directories company YELL (YELL.LO)Group acknowledged the depth of its financial distress on Tuesday as it struggles with a dying core business and over 2 billion pounds ($3.1 billion) worth of debt, much of which it must repay in two years time.

The company, which publishes paper phone books around the world, said it would try to address its troubles with a restructuring, its second in a matter of months, focusing on its new digital business, and by assuming a new name, hibu Plc.

Yell accepted that its attempts to deliver new digital products were late, compounding a case of over-stretched finances that dates back to some ill-timed acquisitions.

"Yell has not progressed as fast as it would like in bringing new products to market," the company said in a results statement that took a big write-down on the value of its old paper operations.

The loss-making company, which was slow in adapting to the shift to online advertising as people began using the Internet to look up local listings, said directors saw a "material uncertainty" which could cast significant doubt about its ability to continue as a going concern.

Analysts agreed that the outlook was black.

"The equity is just not worth the risk given current macro fears, potential difficulties in refinance and the structural challenges faced by the business," Numis Securities' Gareth Davies said.

Yell's shares closed down more than 20 percent at 2.5 pence, less than half their value 12 months ago, leaving only 60 million pounds of equity supporting its groaning debt pile.

Net debt stands at 2.2 billion pounds ($3.5 billion) even after a restructuring last year in which creditors allowed it to buy back debt at a discount and eased credit covenants.

Most of its debts are now due to mature in April 2014, and it hopes to have a plan in place to tackle that problem by the end of the current financial year, in April 2013.


Yell reported a 1.42 billion pounds ($2.24 billion) full-year loss before tax, mostly due to a 1.2 billion pound writedown of the value of its operations in the United States, the UK, Spain, Chile and Peru.

"We would just like to bring things up to date, recognizing the reality of life and saying that those asset balances that made sense 5-6 years ago, no longer make sense today," Chief Executive Mike Pocock said.

Yell has appointed Goldman Sachs and Greenhill as advisers for its restructuring plan.

"Inevitably in the current situation we'll be looking at pretty much all the options that are on the table ... so that will mean it will be everything from the range of looking at new equity right the way to changes in the debt structure and potential different sources of debt and quasi debt instruments," Pocock said, adding that asset sales were unlikely.

The company's new name, hibu, will become the brand name for its new products. All the print products, which are sold under different brands in each country, will continue to be sold under their current brands.

Directory publishers like Yell and its Canadian counterpart Yellow Media Inc have struggled to stem the slide in their print businesses and pare huge debt loads, as more people turn to Internet-based giants like Google to find local listings.

Yell has been working to build on its digital offerings, which now bring in 29 percent of revenue. Last week, Yell bought do-it-yourself website designer Moonfruit Ltd.

(Reporting by Brenton Cordeiro in Bangalore; Editing by Andrew Callus and Elaine Hardcastle)