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Yell to Begin Debt Buyback – Investors are Taking a Haircut

Yellow pages publisher Yell Group said it will begin its debt buyback process on Jan. 10 and conclude it on or before Jan. 19. 

Yell has up to 159.5 million pounds ($245.75 million) available to repurchase part of its 2.6 billion pound debt at discounted market prices. The company’s euro-denominated term loan B is offered at 32 percent to face value in secondary trading, according to Thomson Reuters LPC data

The repurchase is part of the company’s efforts to reduce its debt burden while it implements a number of strategic initiatives to shift from print operations to digital as the business is in decline. To insure more flexibility, lenders to Yell in December agreed, among other things, to provide more headroom on its net debt to earnings (EBITDA) covenant until 2014 and reduce the amount of its revolving credit facility to 75 million pounds from 172.6 million pounds. ($1 = 0.6490 British pounds) 

In December Yell had reached a compromise agreement with lenders over the terms of its £2.6bn net debt, giving the group more headroom within its banking covenants and buying it more time to implement a turnaround strategy.

The highly-indebted publisher said it had agreed a deal with “an overwhelming majority of lenders” to ease its banking covenants, which are based on the ratio of net debt to earnings before interest, tax, depreciation and amortization.

Source:  Financial Times and ISE Finance News

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