Yell directors to cash in on £1.9bn float

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The Independent Online

John Condron, the chief executive of the directories business Yell, and finance director John Davis will make £5.5m and £2.5m respectively by selling some of their shares in the flotation of the yellow pages group.

The news that the two directors plan to offload some of their shares in the group emerged yesterday as Yell confirmed it had officially resurrected its flotation on the London stock market - a plan it was forced to abandon last summer after stock market conditions deteriorated. It said it expected dealings in its shares to start as early as a week tomorrow.

Shares in the company are being sold to institutional investors at between 250p to 300p a share, valuing Yell at between £1.76bn and £2.11bn - compared with last year's £1.8bn to £2.3bn range.

The price tag - and the intention to have a free float of about 51 per cent - should be enough to ensure it a place in the FTSE 100 index at the next review in September.

"We see flotation as a natural next step in the continuing development of Yell," Mr Condron said, adding: "This follows another year of strong delivery."

The flotation, which will be a huge test of investors' appetite for new equity, is being carried out at high speed. Mr Condron and Mr Davis started the so-called roadshow process of selling the stock to investors yesterday and expect to announce pricing details a week today.

Yell is planning to raise £433m, or £403m after expenses, by selling shares to investors - cash it will use to pay down debt. That will see it start life as a listed company with about £1.3bn of debt.

Fees associated with the flotation, including lawyers' and brokers' fees, amount to about £30m, but there are also another £55m of exceptional items relating to the IPO, as well as a £13m charge associated with a new bank facility. Last year's aborted flotation has already cost the company about £15m in total.

The company's two venture capital owners, Apax and Hicks, Muse, Tate & Furst, are also selling about £417m worth of shares in a secondary offer. Those venture capital firms bought Yell from BT two years ago for £2.1bn. The pair will each own a 22.75 per cent stake in Yell once it is listed on the stock market - down from the combined 95 per cent of the business they own now - but will not be able to sell any shares for six months.

Management will end up owning about 3.5 per cent of the company's equity - down from about 5 per cent currently - while the free float will be about 51 per cent.

After selling some of his stock, Mr Condron, who is on a £550,000-a-year salary, will be left with slightly less than 1 per cent of Yell, while Mr Davis will end up with a holding of about 0.4 per cent.

Mr Condron said: "We have good visibility on our future performance and high confidence in our strategy of winning, keeping and growing our advertising customers. We look forward to welcoming our new shareholders and are committed to delivering value to all of them."

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