Dex Media Creditors Said to Demand Talks After Missed Coupon

  • Telephone-listings company didn't pay September coupon
  • Bondholders said to seek inclusion in restructuring talks

A group of Dex Media Inc. junior bondholders is demanding company executives meet to talk about a debt restructuring after failing to make an interest payment last month.

The creditors’ legal counsel, Akin Gump Strauss Hauer & Feld LLP, made the demand for debt talks in an Oct. 1 letter to the telephone-listings company and its lawyers, according to a copy of the letter obtained by Bloomberg. The creditors, who said in the letter that they own a majority of the company’s subordinated bonds, made the case that the company would need their support for a consensual debt restructuring plan if it decided to file for bankruptcy.

Dex Media, which resulted from the combination of two telephone-directory publishers as it emerged from bankruptcy protection in 2013, skipped a Sept. 30 interest payment owed to holders of the subordinated note, which is paid both in cash and by the issuance of more debt.

The company said it was negotiating with senior lenders that hold four different term loans totaling $2.02 billion. Those lenders are being represented by law firm Milbank Tweed Hadley & McCloy LLP and investment bank Houlihan Lokey Inc. for “a possible restructuring” of those obligations, according to a Sept. 30 regulatory filing.

Involuntary Petition

The creditor group, which is also represented by financial adviser Ducera Partners, said it is considering filing an involuntary bankruptcy petition among its legal options to protect bondholders’ investments, according to the letter. The letter said the bondholders have been trying to negotiate with the company for months.

Suzanne Keen, a spokeswoman at Dex Media, didn’t return messages seeking comment. Jeff Mutterperl, a spokesman for Akin Gump, Adam Verost, a representative for Ducera Partners, Larissa Palmer, a spokeswoman for Milbank Tweed, and John Gallagher, a spokesman for Houlihan, declined to comment.

The bondholder group claimed in the letter to hold 80 percent of Dex Media’s $270 million of 12 percent subordinated notes due January 2017. In the event Dex Media filed for bankruptcy protection, the creditors estimated that their debt claims probably would make up two-thirds of Dex Media’s unsecured creditor class, according to the letter.

A company needs two-thirds of support from each creditor group in order to show a bankruptcy judge that a plan of reorganization is consensual.

The notes have plunged from a 2015 high of 47.5 cents on the dollar in February to less than 6.5 cents on Aug. 27, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. 

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