The UK directories business gave lenders until 5pm on Wednesday to agree to its proposals, but failed to achieve the 95% threshold needed. At 5pm Yell had got approval from about 90% of lenders.
It has now given them an extra 24 hours in a final push to avoid a scheme of arrangement, a court process requiring consent of 75% of lenders by volume and 50% by number.
“We have communicated clearly with our lenders and the vast majority, by number and by value, have approved our proposals,” said John Davis, Yell’s chief financial. “We are prepared to provide one further short extension; but we are now very near the point where the board may have to draw a line under the current process and move to a scheme of arrangement.
“The commercial terms that we have proposed have been accepted by the overwhelming majority of our lenders, and it would seem right that their will should be allowed to prevail.”
Yell wants to raise at least £500m of equity to pay down bank debt in return for extending its debt and loosening its covenants.
It wants to push its maturities back to 2014, for which it offered to increase its margins from 3% over Libor to 3.5%-4%, depending on the amount of equity raised and a leverage grid. It will pay a 1.25% consent fee.
Yell’s debt dropped about a point on following its announcement. The term loan ‘A’ traded at 73.0/76.0 on Thursday afternoon and its term loan ‘B’ was quoted at 74.0/77.0. The pieces were trading at 78/80 and 80.5/81.5 respectively on Tuesday, shortly after Yell had announced its first extension to the deadline.
Around 3% of the debt is held by lenders who are restricted from agreeing the proposals for constitutional reasons. Many of these are CLOs who cannot extend the debt beyond their legal final maturity date — the date on which their longest holding matures.
