Yellow Pages sales plans fail
Headquarters of the Yellow Pages in Greenlane. Photo / Paul Estcourt
The Yellow Pages Group is currently excluded, but an analyst says he would be surprised if the company’s bankers didn’t try to sell it again.
The indebted company, acquired by Hong Kong-based Unitas Capital and the Ontario Teachers’ Pension Plan of Canada for $ 2.24 billion in March 2007, in the largest buyout by effect of leverage country said yesterday it had canceled the sale process because expectations of value were unlikely. to satisfy in the current market.
“While there were a number of interested parties, the shareholders of Yellow Pages Group, together with the banking syndicate, felt that they would no longer be prosecuted for the time being,” the company said in a statement.
“The current economic climate is not well suited to large-scale M&A activity and therefore stakeholder value expectations are unlikely to be met in today’s market.”
Investment bank Goldman Sachs has spent the last few months marketing the group to potential buyers. The call for tenders was closed at the end of August.
Only foreign buyers would have been potential bidders for the company, which has $ 1.7 billion in debt to 28 bankers and debt holders. But the bidders are believed to have been put off by the deterioration of the company’s revenues and staff turnover.
Last month, Pages Jaunes‘ chief financial officer left the company.
Market commentators had valued the company at between $ 900 million and $ 1.05 billion, but yesterday’s speculation put the bids as low as $ 450-600 million.
Neither Yellow Pages chief executive Bruce Cotterill nor the banks were available for further comment, but in the statement, the banking union said it would now seek to complete the already advanced restructuring plans of the debt.
A spokesperson for Yellow Pages said the banks remained in meeting yesterday and the company hopes to have a restructuring plan in place by Christmas.
“It’s up to the banks and the owners how they do it, but because the debt is spread over so many players, it will take time.”
Bankers said they intend to take a long-term view as owners of the business.
Mark Clare, a partner at boutique investment bank Woodward Partners, which has been monitoring the company closely, said he was not surprised by the failure of negotiations.
“The real haircut would have reached a point where it was too difficult for the banks to take.”
He said he would be shocked if the banks didn’t try to put the company back on the market.
“I would expect them to support him for a while and try to sell him on the track.”
Clare said it was impossible to know how long it could take for the market to recover.
Another source said the situation could lead to a change in the management and strategy of the company, but a Yellow Pages spokesperson said no staff changes were expected.
In the statement, Cotterill said it was good to have some clarity after the uncertainty associated with the sales process.
“The banking union has worked hard to achieve a result that will lead Yellow into the future. We look forward to working with them to finalize the debt restructuring and move forward.”
He said the company is working on positive initiatives to ensure its success over the next few years.
Yellow Pages is expected to release its year-end financial results in the coming weeks.