£2.3bn debt swap wipes out Yellow Pages investors

Yellow Pages owner hibu today finally collapsed into the arms of its lenders under the burden of £2.3 billion of debt, wiping out shareholders and marking an ignominious end to its history as a listed company.

Shares were suspended before trading began at 0.17p — an astonishing plunge from a peak of 603p in February 2007.

Lenders, which include veteran investor George Soros’s Soros Fund Management, will now take control in a long-awaited debt-for-equity swap.

One third of hibu’s 300 lenders have already backed the refinancing, which would see hibu’s debt load slashed to £580 million, with the lenders owning a further £920 million in loans that will be converted to stock later. All the non-executive directors, including chairman Bob Wigley, will step down.

Chief executive Mike Pocock was meeting representatives of the lenders this afternoon to present the plan for hibu’s survival and said he was “optimistic” the necessary 75 per cent would approve it by the autumn.

Pocock, who was appointed in 2011 to salvage the company, claimed that hibu’s end as a listed company was not bad news as it ended more than a year of uncertainty.

“In many respects, it’s a good day for us,” he insisted. “The refinancing of the balance sheet will be something that will give this company something to focus on for the future, rather than the present or the past.”

Hibu, which was known as Yell until a controversial rebranding a year ago, has been struggling after it went on a debt-fuelled acquisition spree in the boom years before 2007 under previous chief executive John Condron.

The publisher of Yellow Pages phone directories was also badly hit as its customers, chiefly small and medium-sized businesses, switched to the internet and Google. Wigley said: “When I joined the company four years ago, it had £4 billion of debt, a CEO who had been here 29 years and it didn’t have a comprehensive digital strategy and was within months of going bust.”

He maintained that hibu has made progress in digital, which is now 38 per cent of turnover, even though group revenues plunged 16 per cent to £1.35 billion. The group lost £2 billion in the year to March.

Pocock insisted morale was “surprisingly good” despite two US executives being dismissed earlier in the year and offered “no apologies” for paying staff bonuses in April, even as investors were wiped out. He has not considered resigning. “You either love to do transformations or you don’t,” he said.