CIBC World Markets and Merrill Lynch have been selected to lead the proposed credit backing the buyout of Yell Corp., by private equity firm Hicks, Muse, Tate & Furst and Apax Partners & Co. A banker familiar with the situation said that British Telecommunication, which owns the phone directory business that includes Yellow Pages, may not proceed with the sale or it will be at a heavily discounted price.
The loan was to be $4.3 billion, denominated in Sterling, but the valuation of the business has been heavily downgraded after the U.K Office of Fair Trading ruled that the Yellow Pages directory will have to offer advertising rates at inflation minus six percentage points. The current rate is inflation minus two points. Bankers were anticipating a jumbo credit to be launched next month in Europe and the U.S.
A spokesman for BT, said the company has made no secret of its desire to realize valuation on the business, but at this time, no comment can be made. A spokesman for Hicks Muse also declined comment. Officials at Merrill and CIBC in New York referred comment to the syndication teams in London, which did not return calls.