Yellow Pages value slashed leaving it $1.44 bln in the red

Yellow Pages value slashed leaving it $1.44 bln in the red

by Pattrick Smellie

Jan. 7 (BusinessDesk) – Directory company Yellow Pages has posted an annual loss of $1.44 billion as it slashed the value of the business as part of a proposed restructuring that will hand over control to its lenders.

Holding company YPG Holdings’ took a $1.61 billion impairment charge on the value of its goodwill and brand name as its net loss more than quadrupled in the year ended June 30, according to financial statements lodged with the Companies Office.

The writedown is part of a proposed restructure that will value Yellow at $750 million, $258 million of which is attributed to its brand.

Yellow prepared the statements on a realisation basis, meaning its assets are valued at the amount expected to be attained under the terms of its restructuring.

Under the draft terms of the proposal, Yellow’s trading operations and brand will be sold to a new holding company owned by the groups’ senior lenders, with the remaining subsidiaries placed into receivership, the company said in a note entitled ‘events occurring after the balance sheet date’.

The company, which Telecom Corp. sold in 2007 for $2.24 billion in a leveraged buy-out to Hong Kong-based Unitas Capital and Canada’s Ontario Teachers’ Pension Plan, aborted its planned sale process in September after it didn’t receive any bids that were acceptable to the lenders.

The sale and restructuring process cost the firm $6.3 million in the period. A potential sale of Yellow was the subject of much speculation last year as slowing revenue struggled to keep pace with the cost of mounting debt.

The company’s total secured debt rose to $1.81 billion from $1.72 billion, and after the reporting date, it has only made interest payments on its $1.17 billion of senior ranking debt.

The financial statements show the company was continuing to trade on a month-to-month basis at the whim of its lenders, who could have called in their debt after Yellow breached financial undertakings and certain payment obligations in March and April of last year.

As it was, the breaches let interest hedge providers call on their swaps, costing Yellow some $163.6 million.

Yellow paid some $114.4 million in interest in the year ended June 30, compared to $154.3 million the previous year, and accrued interest of $69.5 million, compared to $35.1 million.

Though the finance costs and writedowns left Yellow’s books in the red, its trading profit was flat at $143.3 million, even as revenue sank 7.6% to $274.4 million.

It also managed to bolster its cash reserves, which are being held to service interest repayments. Net cash inflow from operating activities rose 16% to $60.5 million. Yellow spokespeople weren’t available to comment.

(BusinessDesk) 16:36:54

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