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Yellow Pages' banks to vote on restructure next week likely to see them take NZ$1 billion haircut

Yellow Pages' banks to vote on restructure next week likely to see them take NZ$1 billion haircut

By Gareth Vaughan

About 40 banks holding Yellow Pages Group's debt are expected to vote on a restructure of the directories firm's debt mountain next week, which is likely to see them crystalise massive losses.

The outcome of the vote is likely to see the banks, led by BNZ and also including ANZ, Westpac, and Deutsche Bank - which may have the biggest individual exposure - crystalise around NZ$1 billion of losses, although some of the debt may be reclassified as equity. The banks loaned about NZ$1.5 billion to a Hong Kong-based private equity group and a Canadian teachers pension fund to help fund the NZ$2.24 billion purchase of Yellow Pages from Telecom in March 2007. was told the initial restructure plan would see the business valued at about NZ$750 million. This followed an unsuccessful attempt to sell Yellow Pages.

However, was told that plan could be shelved in place of a plan to value it at just NZ$500 million with the NZ$250 million difference reclassified as equity. Yellow Pages CEO Bruce Cotterill said to his knowledge, the restructure didn't envisage the firm being valued at NZ$500 million. However, he declined to say what valuation was likely to be placed on Yellow Pages.

"I can't comment on the value they (the banks) have set. It has to go to a vote of the banks, which will probably take place next week," Cotterill said.

Sale option rejected

The debt restructure comes after the banks decided against selling Yellow Pages through a sales process run by Goldman Sachs earlier this year, understood to have attracted interest from potential buyers ranging from about NZ$400 million to about NZ$600 million.

Cotterill said the banks' vote would be on a pro-rata basis based on the value of Yellow Pages debt they each hold. Two-thirds of the debt by value needed to be voted in support of restructure proposals for them to pass. The banking group is chaired by independent chairman and KordaMentha partner Brendon Gibson.

A new board is also being assembled. Cotterill said announcements on the board, and Yellow Pages' June 2010 year financial results, were likely in late January. He declined to comment on suggestions revenue from Yellow Pages' key Auckland phone books had taken a significant year-on-year fall.

Unitas Capital - formerly CCMP Capital Asia - and Teachers’ Private Capital, the private investment arm of the Ontario Teachers’ Pension Plan, bought Yellow Pages from Telecom in March 2007 for NZ$2.24 billion in a leveraged buyout that included about NZ$1.5 billion of debt. That debt had swelled to NZ$1.7 billion by June 30 last year, and with revenue falling YPG breached its banking covenants. Its banking consortium then hired Goldman Sachs to try and sell the business with a debt standstill arrangement in place at Yellow Pages.

'Wiped out'

The holders of Yellow Pages subordinated debt, including Deutsche Bank, Barclays Capital and ABN Amro, have already seen this effectively wiped out. The shareholders too, face a complete loss although a spokeswoman for the Ontario Teachers' Pension Plan recently told that Yellow Pages remains a part of the Teachers' Private Capital's portfolio.

Deutsche Bank is also understood to be among the senior debt holders, who were owed NZ$1.2 billion as of last June, potentially leaving it facing the biggest loss from Yellow Pages among the banks. was told Deutsche Bank New Zealand had total exposure to Yellow Pages of about NZ$200 million, evenly split between subordinated and senior debt. Based on the  33.5 cents in the dollar price Yellow Pages' debt has traded at recently, that could see Deutsche Bank facing a loss of about NZ$166.5 million.

A spokeswoman for Deutsche Bank declined to comment.

Bullet dodged

Aside from BNZ, ANZ and Westpac, other senior debt holders are thought to include Credit Agricole Corporate and Investment Bank (formerly Calyon), Barclays, Macquarie Group, Allied Irish Banks and the Royal Bank of Scotland. The subordinated debt holders tried to offload NZ$300 million of Yellow Pages' debt to the public in 2007 through a retail bond offer that was first halved to NZ$150 million and then cancelled due to lack of demand as the global credit crisis kicked in.

Cotterill, an experienced executive whose previous roles include stints heading up Colliers Jardine's Australasian operations, the New Zealand arm of Kerry Packer's ACP Media and at Canterbury International, told in a Double Shot interview last month that Yellow Pages was the biggest challenge he had faced. He also said he still saw plenty of opportunities for innovations with the firm's phone books and other directories.

Meanwhile, Australia's Telstra yesterday revealed it had failed in a court appeal aimed at keeping the telephone directories published by its subsidiary Sensis copyrighted. Local lawyers specialising in copyright issues have said the case could ultimately have implications in New Zealand.

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If Bruce Cotterill declines to comment on Auckland directory, let me help him.


Pull out last years copy and see how many pages it published.


Now look at current years directory and see how many pages it contains.


If this year's publication contains fewer pages, your revenue is probably down.


Simple really......

I wouldn't want ot be an old teacher in Ontario at the moment...from this page;

"....shareholders too, face a complete loss although a spokeswoman for the Ontario Teachers' Pension Plan recently told ....."

From this link........


"....... joint venture under a Forestry Right between the Wedd Family Trust and the Ontario Teachers Pension Plan, for sale is 175 hectares of land ......."



I wonder if the banks will take a "haircut" in the rural market?




Things keep getting worse for Yellow. Lining up the Auckland flagship Yellow Pages directories from the last few years is like a set of stairs going DOWN. The loss year on year in the Auckland directory would surely have to be in the region of 20% down from each previous year with the loss of all those valuable display advertisements.

In a further blow to Yellow's chances in New Zealand is the decision from the courts this week against Telstra [owner of Sensis/Yellow in Australia].

Telstra has lost copyright over listings in the Yellow Pages and White Pages directories because of increasing automation of the production process, in a legal decision that will affect other database and list publishers.

A three-judge Federal Court panel yesterday unanimously dismissed Telstra's appeal from an earlier case in which Justice Michelle Gordon decided the directories were not protected by copyright because they were not ''independent intellectual effort''.

New Zealand courts will likely agree with BOTH court decisions in Australia and this now opens the door for every man and his dog to potentially compete with Yellow.

Robert, 20% was the figure I had heard too.

Heres some more good must be getting dire if you have to pay the Cops to come to your aid...