Thursday, March 12, 2009

RH Donnelley Hires Lazard, Set To Restructure

Yellow Pages operator RH Donnelley announced its full year results earlier and said it was seeking to restructure its capital structure. The company whose EBITDA was 2% lower from prior year at $1.4 billion was impacted by 8% declining advertising sales at $2.5 billion.

More curiously the company announced it was hiring Lazard ahead of a capital structure reorganization: RHD, whose recent borrowing of $361 million on its revolver "in order to increase liquidity and financial flexibility given the continuing uncertainty in the global credit markets" was seen by the markets as a preemptive step to build cash in case a DIP loan is not forthcoming, comparable to Nortel's situation.
R.H. Donnelley has engaged Lazard as its financial advisor to assist in the evaluation of its capital structure, including various balance sheet restructuring alternatives.

"Our goal is to better position R.H. Donnelley for the future by establishing a more sustainable capital structure," said Steven M. Blondy, executive vice president and CFO. "We have significant debt maturities commencing in 2010 that we are working to address. Though we intended to refinance this debt prior to maturity, it may no longer be possible to do so given the current state of the capital markets. In the meantime, the company continues to generate robust EBITDA and has significant liquidity to meet all our financial and business obligations."

As R.H. Donnelley's 11.75% Notes due May 2015 are trading in the low teens these days, the market is certainly not placing too much hope on a successful recapitalization at the Yellow Pages publisher.

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