The Great Debate UK
It's hard enough to persuade your bank manager to agree new terms for your overdraft, but when there are 300 lenders who are owed nearly 4 billion pounds between them, it's perhaps no wonder that Yell's refinancing seems to be taking forever.
In June the Yellow Pages publisher signalled that the process was underway. On Wednesday it revealed agreement with its lead banks and a headline figure of 500 million pounds for its rights issue, roughly its market capitalisation after the recent run-up in the shares. The issue itself is unlikely before November, as Yell still needs time to corral its myriad lenders to agree to restructure its debt.
Now it has struck a deal with 40 per cent of the lenders, Yell can at least confirm the size of the bill for shareholders, while also warning that they will need to find a further 300 million pounds if no alternative can be invented. At least, before the rights issue door finally slams shut, the company has got its foot in it.
There are no nasty surprises on trading for this year, but things remain grim and Citigroup and Cazenove were quick to cut their forecasts for next year. The migration from yellow paper to the web is slow and uncertain, but a successful refinancing would prevent a fire sale of the Spanish and US businesses, keep the well-regarded John Condron in charge and prevent the banks from grabbing the company.