DealZone

Lenders quiet on Yell support

October 29, 2009

For Yell, the publisher of Britain’s Yellow Pages directories, there is a world of difference between 90 and 95 percent.

The lower figure is the amount of lenders backing its debt financing plan, the higher figure is the amount it needs. If it falls short of its target this evening, the company may need to go to the court to push through a deal.

(News story here.)

The proposals are vital to the heavily indebted company’s short-term future, allowing it to rejig its capital structure and tap equity investors for up to 500 million pounds.

However, the size of the company’s lender group – 300 banks and funds – is working against it. Trying to get all the lenders signed up to the debt deal has been as difficult as herding cats, bankers say.

Going to the courts for approval can be lengthy and expensive, lawyers say. For Yell, a court case may mean they will miss tapping the equity markets before the end of the year. This will disappoint, as the equity markets have backed a range of weak companies in recent weeks, such as HeidelbergCement and Ladbrokes.

Yell may need to hope their generous spirit continues into the new year.

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