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Yellow Media recapitalization plan in place, debt cut by $1.5-billion

The publisher of the Yellow Pages directories has about $900-million in remaining debt after a recapitalization plan that it hopes will be part of its transformation to a digital media and marketing company.

Parent company Yellow Media Ltd. said Thursday it cut its debt by about $1.5-billion under the plan.

Total debt before the restructuring was more than $2-billion.

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"It was a difficult year for all of our stakeholders, but this is a great outcome for the company," said president and chief executive officer Marc Tellier.

"It removes the uncertainty for advertisers, for employees. It allows us the flexibility to focus on our digital transformation," he said in an interview.

Yellow Media owns a number of publications including the Yellow Pages print directories,, and

Mr. Tellier said the company has about 320,000 customers, of which 61 per cent advertise online.

Yellow Media also builds websites for small and medium-sized businesses and provides such services as e-mail marketing, search engine marketing, video production and mobile advertising.

Last winter, Yellow Media shook up its board and brought in experts in restructuring and corporate finance to help deal with its debt. The company also cancelled its shareholder dividend.

The recapitalization plan was recently approved by Quebec Superior Court after getting the go-ahead from Yellow Media's debtholders, shareholders and convertible-debenture holders.

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The restructuring saw the company's various creditors exchange their debt for a combination of cash, new secured and unsecured debt as well as new shares and warrants in Yellow Media, depending on their holdings.

The company's shareholders also received new shares in the company and warrants.

Mr. Tellier said he expects it to take roughly 18 to 36 months to complete Yellow Media's transformation.

"We're not replacing the print declines fast enough with the new online revenues, but as online continues to be a bigger part of the business, we feel good about the strategy."

The company – which printed its first directory in 1908 when it was still part of Bell Canada – has had to adapt to consumers finding information about local businesses online and on mobile devices.

Mr. Tellier said on annualized basis about 34 per cent, or $370-million, of Yellow Media's revenues are digital.

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The company recently announced it's adding about 170 Montreal-based information and digital technology positions, but about 125 clerical positions will be moved to other company offices across Canada from Montreal.

Yellow Media also has an expanded partnership with Yahoo Canada for local search results.

In its recent third-quarter results, Yellow Media earned $24-million, or 4 cents per share. The profit was a turnaround from the same time last year when Yellow Media took a huge writedown on assets that resulted in a loss of $2.8-billion.

Adjusted earnings were $77.1-million, or 15 cents per share, in the latest quarter. That compared with $69.2-million, or 14 cents per share, in adjusted earnings last year.

But, revenue fell 17 per cent year-over-year to $267.7-million from $323.4-million as a result of lower print revenues, discontinued directories and the sale of an online classified ad site in November, 2011.

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