For the first time in Yellow Media's fight to restructure, retail investors can say they have won a round.
In the midst of a court hearing to weigh the fairness of the restructuring, Yellow Media announced Tuesday that the company agreed to cough up more to convertible debenture holders, many of whom are retail investors whose patience has been sorely tested.
These mom and pop investors have stood by management and held on to the stock while advertising in Yellow Media's traditional print products – and the stock price – fell off a cliff.
No doubt they were greedy for yield that was in the low teens for some time and then shot as high as 30 per cent. However, they also believed that management had the situation under control.
But then Yellow Media sold Trader Corp. Then it cut its dividend. Then it filed for restructuring.
The terms of the restructuring announced in July were the last straw – particularly for convertible debenture holders. Although these securities rank higher in the capital structure than preferred and common shares, convert holders were offered very little, and they cried foul the minute the plan went public.
To appease them, Yellow Media amended its restructuring terms and tried to cough up a few more common shares of the restructured company. The law firm representing the convert holders wasn't having any of it. "Clearly, this is not viewed as a serious attempt to address our group's concerns," lawyer Mark Meland of Fishman Flanz Meland Paquin LLP wrote in an e-mail to The Globe and Mail.
Although an amended restructuring plan was ultimately approved by bondholders, the case is now being heard in Quebec court. Just two days after the hearings started, Yellow Media came out with a another amendment and offered convert holders some subordinated debt and warrants, and also agreed to pay the converts' semi-annual interest payments that were due Oct. 1.
As Steve Ladurantaye, the Globe's media reporter, wrote this morning, the convert holders now back the deal.
They got what they wanted, or at least most of it, and now retail investors can move on feeling like they aren't getting shafted.