Hibu Plc (HIBU) lenders will write off 800 million pounds ($1.2 billion) under proposals for them to take control of the U.K. yellow pages publisher in a debt for equity restructuring.
The company, formerly know as Yell, has agreement from lenders representing 32.8 percent of its debt, according to a statement. A minimum of 75 percent is required for the deal to be implemented.
Hibu’s restructuring follows a collapse in earnings as competition from the Internet triggered a decline in its paper directory-based business. Profit before interest, tax, depreciation and amortization for the year to March 2013 dropped to 283 million pounds from 461.3 million pounds the year before, the Reading, England-based company reported today.
“The new capital structure is intended to support the business as it drives value from print and digital directories and develops its digital strategy,” Mike Pocock, Hibu chief executive officer, said in the statement.
The debt writedown will leave Hibu owing about 580 million pounds of senior secured debt due in five years and about 920 million pounds of payment-in-kind notes maturing in 10 years. PIK notes allow a borrower to pay interest with more debt.
The group told lenders in October that it would suspend interest and principal payment on its borrowings until a restructuring agreement was found.
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