The future of the Yellow Pages owner Hibu looks increasingly precarious after the debt-laden group issued a new profit warning yesterday – with just days to go until a crucial bank covenant test.
Underlying profits will be lower than market expectations, the group admitted.
Shares in Hibu crashed 35 per cent, to a near-record low of 0.44p, slashing its stock market value to £10.5m. It means that the group, known as Yell until a rebranding in July, has seen its shares slump more than 99.9 per cent from the 600p peak they reached in 2007.
The company has a £2.2bn debt burden – a legacy of an acquisition spree before the credit crunch – and those close to Hibu admit that its lenders are likely to seize greater control in a debt-for-equity swap in the next three or four months.
Hibu admitted that investors could see their shareholding diluted and that could mean "little or no value" is left in the already bombed-out shares.
The latest grim trading update comes just one day after Hibu told the stock market that it was set to miss the covenant test, which is based on a ratio of profits to debt, and the management has asked to postpone it from 30 September for two months.
There was surprise in the City that the company announced yet more bad news yesterday, rather than getting it all out in one go the day before.
Hibu's chief executive Mike Pocock, however, insisted that he remained "confident in the group's four-year strategy".
The group still generates more than £1bn a year in turnover, but print revenues have slumped and Hibu is struggling to increase digital sales against internet-only rivals, such as Google.
Mr Pocock, who was brought in last year as a turnaround expert, is pushing into e-commerce, helping to offer web services for small businesses.