Solocal Plans $600 Million Capital Increase to Reduce Debt

Solocal Group, the French directories publisher formerly known as PagesJaunes, plans to raise 440 million euros ($600 million) from a share offering to reduce its 1.6 billion-euro debt load.

The company will propose the capital increase at a shareholder meeting in April and the deal is reliant on creditors agreeing to extend 1.3 billion euros of loans maturing in September 2015, according to a statement. A group of five investors including Paulson & Co. and Boussard & Gavaudan Holding Ltd. have underwritten the equity issue, which is also backed by three of its biggest existing shareholders.

Solocal wants the approval of at least 90 percent of its lenders for the debt extension, it said. If the Paris-based company doesn’t get this level of support it will seek to implement the refinancing through a process managed by the French courts, dependent on it getting two-thirds support from creditors for the proposal.

The deal represents a “significant and long-term strengthening of Solocal Group’s capital structure,” and will provide the company with the resources to boost its Internet activities, said Jean-Pierre Remy, Solocal’s chairman, in the statement.

The company’s 350 million-euro 8.875 percent notes rose as much as 18 percent to 94 cents on the euro after it announced the plans, according to Bloomberg data. Holders of the notes have been asked to allow a court-led refinancing to take place without triggering a default, according to the statement.

Europe’s biggest directories companies are reducing or restructuring their debt as they manage high borrowing levels and a decline in paper directories. Hibu Plc, the U.K. yellow pages publisher, and Seat Pagine Gialle SpA, are both going through court-managed processes to cut the size of their bank debt.

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