European Directories Squeezes Junior Lenders as Backlash Builds

European Directories BV’s insolvency filing in the U.K. last week brings mezzanine debt losses on LBO loans in the last two years to more than $1 billion, pushing up borrowing costs on new junior-ranking loans.

The Dutch company, whose 2 billion-euro ($2.7 billion) filing Dec. 6 ranks as the largest administration in the U.K. this year, left mezzanine loan holders with no recovery. The yellow-pages publisher arranged a U.K. prepackaged administration, a quickie bankruptcy that squeezed junior lenders out of holdings.