Jim Armitage: Yell in frustration after the demise of Hibu

The demise of Yellow Pages (I refuse to use its awful new names) will be studied by MBA students for decades as a case study of corporate insanity. Few businesses have been so badly run for so many years.

But while the poor strategies of John Condron and Mike Pocock do not need repeating, others also deserve to be mentioned in the lecture theatres of Harvard: the bankers and private equity tycoons who encouraged the executive teams to load up with debts.

When the private equity groups Apax (step forward New Labour darling Sir Ronnie Cohen) and Hicks, Muse, Tate and Furst bought Yell from BT in 2001, it was for £2.1bn. By the time they flipped it to the stock market two years later, they had loaded it up with loans of £1.3bn.

By 2006, its debts had reached £1.6bn. But, thanks to the credit peddlers at Citigroup, Deutsche Bank, Goldman Sachs and HSBC, it nearly tripled that to £4.65bn to fund the takeover of Spain's TPI. In what was financial suicide, only £350m of the £2.3bn purchase price was funded with equity. The vendors at Telefonica are still laughing to this very day.

Mr Condron, then chief executive, described Spain as "one of Europe's largest and most attractive economies". Hmm. John Davis, his finance director, promised: "The enlarged group's strong cash flows will rapidly pay down debt." Double hmm.

That pair at least lost wealth and reputation from the collapse in the share price that soon ensued. But the arrangers and cheerleaders of that bumper Spanish debt disaster, named in official documents as Deutsche Bank's Geoffrey Austin and Michael Stock, and Goldman Sachs' Simon Dingemans and Chris Bischoff, walked off into the sunset with their bonuses intact.

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