Skip to main content
Canada’s most-awarded newsroom for a reason
Enjoy unlimited digital access
$1.99
per week
for 24 weeks
Canada’s most-awarded newsroom for a reason
$1.99
per week
for 24 weeks
// //

File photo of Marc Tellier, chief executive officer of Yellow Media Inc.

Ryan Remiorz/The Canadian Press

Yellow Media Inc. has threatened to reduce almost $2-billion of debt through creditor protection if a recapitalization plan designed to give it breathing room to realign its business is rejected at a special meeting next week.

"Delaying the inevitable will adversely affect our business as will a long, acrimonious and protracted restructuring," chief executive Marc Tellier said Tuesday during a conference call.

"We have tabled clearly the best alternative available to us and if a recapitalization is not implemented we may be required to immediately pursue alternatives that are less favourable to the company and its stakeholders."

Story continues below advertisement

The Montreal-based directory publisher said it has amended the resolution approving the recapitalization to authorize the company to implement the plan through the Companies' Creditors Arrangement Act if the current effort "appears for any reason impracticable."

Mr. Tellier said the board of directors has unanimously determined that the recapitalization plan is in the best interests of Yellow Media after considering alternatives proposed by major stakeholders.

A group of lenders has filed a motion with the Superior Court of Quebec to challenge the company's proposed plan to swap debt for equity.

The group, representing holders of 6.25 per cent convertible unsecured subordinated debentures, represents numerous retail and institutional investors.

It wants Yellow Media to withdraw the proposed plan of arrangement, which it says is unfair to the group, and has said it will vote against the proposal.

Without specifically referring to any group, Mr. Tellier said any recapitalization alternative "must be executable in the context of financial reality and the legal and financial constraints that exist."

Under terms of the recapitalization proposal, holders of convertible debentures, preferred shares and common shares will receive 17.5 per cent of new shares in the company, along with warrants representing 10 per cent of new common shares.

Story continues below advertisement

Existing credit facility lenders and note holders will share $750-million of senior secured notes, $100-million of subordinated unsecured debt, 82.5 per cent of new shares and $250-million of cash.

Overall, the plan would cut $1.1-billion of debt or $1.5-billion if preferred shares are included. No debt will mature before 2018 and Yellow would save $45-million a year in interest payments.

Mr. Tellier said Yellow needs time and financial flexibility to transform itself into a digital media company amid a decline its print business.

More than 44 per cent of Yellow Media's debt is due in 18 months, producing refinancing risk for which there is "no silver bullet," he said.

McMillan LLP, counsel for another group of lenders that includes major banks, has said it would be best for the company to withdraw its proposed restructuring plan under the Canada Business Corporations Act and instead enter further talks with stakeholders.

The Toronto-based law firm represents Canada's Big Six banks – the Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank, Bank of Nova Scotia, Royal Bank and Toronto-Dominion – plus the Caisse Centrale Desjardins. They said they were owed $369-million plus interest by Yellow Media as of last Sept. 28.

Story continues below advertisement

Glass Lewis & Co. and Institutional Shareholders Services Inc., two independent proxy advisory firms, have recommended that common shareholders vote in favour of the proposed recapitalization, it said.

Report an error
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies