Solocal Gets Consent for $1.8 Billion Court-Led Extension DealPatricia Kuo
Solocal Group won bondholder support to use a court process to extend 1.3 billion euros ($1.8 billion) of loans if the French directories publisher doesn’t get enough backing from lenders for the maturity change.
Holders of 350 million-euro 8.875 percent bonds due June 2018 supported amendments allowing Solocal to opt for legal procedures to get the extension if it doesn’t obtain 90 percent support, according to a statement. Without the amendments, the company may have had to repay the bonds before maturity.
Getting agreement to extend its loans to 2018 from 2015 is required to unlock a 440 million-euro capital injection offered by investors and lenders. The new cash would reduce the Paris-based company’s debt by 400 million euros.
Solocal, formerly known as PagesJaunes, would seek “conciliation” and “sauvegarde financiere acceleree” processes if more than two-thirds of lenders but less than 90 percent of lenders agree to extend the loans, it said Feb. 13. The legal measures would allow the company to extend the debt with a lower proportion of lender support.
The option to use the French courts would be the equivalent to a distressed debt exchange and may “lead to the cram-down of non-voting debt holders,” Fitch said in a Feb. 14 report. The rating company lowered its rating of Solocal by five steps to C.
Holders of the loans have been asked to respond to the extension request by today, a person familiar with the matter has said.
Europe’s biggest directories companies are reducing or restructuring their debt as they manage high borrowing levels and a decline in their traditional businesses. U.K. yellow pages publisher Hibu Plc and Italy’s Seat Pagine Gialle SpA are both going through court-managed processes to cut their bank debt.
Solocal’s operating income dropped 19 percent in 2013 to 329 million euros, it said in a results statement this month. Sales from its paper directories unit fell about 16 percent to 345 million euros while its Internet business grew 2 percent to 633 million euros.