Yellow Pages Said to Hire Advisers for Canada Bond Refinance

  • Bank of Montreal, National Bank said to handle bond sale
  • Company looking to refinance about C$290 million of 2018 debt

Yellow Pages Ltd. has hired banks to lead a refinancing of some of its debt as it seeks to turn around its digital advertising business.

The company selected Bank of Montreal and National Bank of Canada to sell bonds to refinance its 9.25 percent 2018 notes of which about C$290 million ($215 million) is outstanding, according to people with knowledge of the matter. The Canadian-dollar deal, which is expected to launch in the next few weeks, is being marketed to investors, said the people, who asked not to be identified because the matter is private.

Montreal-based Yellow Pages, synonymous with the thick phone book once widely delivered to Canadian homes, has been trying to grow its digital business since restructuring five years ago. Those efforts hit a snag in February when the company posted fourth-quarter earnings that were below expectations and took a C$600 million writedown. The company’s revenue has been cut in half since 2009 and it said on its first-quarter call with analysts that it was working with advisers to refinance the November 2018 notes.

Representatives for Bank of Montreal and National Bank of Canada declined to comment. A representative for Yellow Pages wasn’t immediately available to comment.

The company’s debt is about C$400 million, according to data compiled by Bloomberg. The 2018 bonds, which are callable at 100 cents on the dollar, are currently trading around that price.

Investors have also encouraged the company to pursue sales of non-core assets, such as its Juice Mobile business, once the debt refinancing is completed, but that is not currently on the table, the people said.

Canso Investment Counsel Ltd. and GoldenTree Asset Management LP both increased their equity stakes in Yellow Pages in May, according to recent filings. Canso now owns about 31 percent and GoldenTree holds 20 percent of shares outstanding, they said.

Together with Polar Asset Management Partners Inc., which also recently increased its stake, the three investment firms hold more than 60 percent of Yellow Pages outstanding shares as well as some of its debt, Toronto-Dominion Bank equity analyst Bentley Cross wrote in a note Wednesday.

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