Hibu Plc, the U.K. yellow pages publisher, has been downgraded to default status after the company failed to make a payment on more than 2 billion pounds ($3 billion) of loans.
Standard & Poor’s lowered the Reading, England-based company’s rating to D from CC after it failed to pay interest due yesterday on loans from 2009, S&P said today in a statement. Its 630 million-pound Term Loan A1 is quoted at about 18 percent of face value, according to prices compiled by Bloomberg.
“We do not believe that the group will make the interest payments within the following five business days because it is contemplating a financial restructuring,” S&P said. “Recent adverse macroeconomic and market developments make the group’s existing capital structure unsustainable.”
Hibu, formerly known as Yell, joins other European directories companies in renegotiating loans as paper-directory businesses suffer from Internet competition and large debt burdens. Italy’s Seat Pagine Gialles SpA last month said it wouldn’t pay interest on debt and sought protection from its creditors.
Hibu said last month it didn’t expect to make the payment of about 49 million pounds and would also miss a further 25 million-pound payment on March 28. Hibu obtained temporary approval from lenders allowing it to hold debt restructuring talks, and had sought an extension to March 29, it said.
S&P said Hibu has sufficient liquidity to make upcoming interest payments and debt amortization requirements because it had about 135 million pounds of cash at the end of 2012.
Andrew Dowler, a London-based spokesman for Hibu, declined to comment on the loan payments.