Speculation is mounting over the future of the Yellow Pages Group after it emerged yesterday that its bank lenders could put the company up for sale to help pay for the $1.72 billion in debt owed to them.
Website interest.co.nz said it understood Yellow Pages' lenders, which include
BNZ, ANZ and Westpac, want to test the market for the directories business, have formed a steering group and are seeking an investment bank to advise them.
On Friday the business was reported to have signed a standstill agreement with its lenders to give the company breathing room to restructure its capital. That agreement lasts until May 31.
Yesterday Yellow Pages said it had no comment to make on the potential sale. A spokeswoman for the BNZ said client confidentiality precluded it from making any statement about it. Westpac also did not wish to comment.
Hong Kong-based Unitas Capital and Canada's Ontario Teachers' Pension Plan bought the business off Telecom in 2007 at the height of the private equity boom and paid between 13 and 14 times its earnings before interest, tax, depreciation and amortisation ebitda.
The $2.24 billion leveraged buy-out was one of the largest deals ever done in New Zealand.
Yesterday market sources said the business could be attractive to buyers such as Telstra or private equity funds but it was likely to be worth just five or six times its current ebitda.
Latest accounts for the year to June 30 last year put Yellow Pages ebitda at $166.3 million, putting a potential sale price at around $830 million to just under $1 billion - less than half what it sold for.
Mark Clare of boutique investment bank Woodward Partners, who analysed the deal in 2007, said he was not surprised the banks were considering a sale given the company was close to breaking a banking covenant, but believed a capital restructure was still a more likely option.
Yellow Pages Group was still an attractive business with strong cashflows. But any potential buyers would depend on what price the banks wanted for it.
He said a sale was only one option. The banks could also force a re-capitalisation which could force the owners to put more money in. Senior debt holders include a syndicate of banks.
Interest.co.nz said it understood the banks could not force shareholders to sell until Yellow Pages breached its banking covenants.
Photo / Paul Estcourt
Speculation is mounting over the future of the Yellow Pages Group after it emerged yesterday that its bank lenders could put the company up for sale to help pay for the $1.72 billion in debt owed to them.
Website interest.co.nz said it understood Yellow Pages' lenders, which include
AdvertisementAdvertise with NZME.