Debt, downturn drag phone-book publisher R.H. Donnelley into Chapter 11 - Denver Business Journal:

hustbelogehy1857.blogspot.com
The Cary, N.C.-based company said that it has reached an agreemenf in principlewith “keg creditor key creditor constituencies” on a reorganizatio n plan that would reduce the company’s debt by $6.4 eliminating about $500 milliobn in annual interest payments. The Chapterr 11 filing punctuates a dramaticd fallfor R.H. Donnelley, whicnh had a $5 billion markert capitalization inMay 2007. The company was brought down by twomajort forces: (1) the flight of traditional Yellosw Pages advertisers to the Internet and (2) a staggeringg debt load of $9 billion, most of whichn was accumulated through a series of acquisitions when the businesxs was riding high. R.H.
Donnellety publishes the largest phone directory forthe 14-state territoryt of and employs hundreds of people locally. Its Dex Media divisiojn used to be ownedby Denver-based but Qwest sold the unit for $7 billionm in 2003 to private equity firmsa that later sold it to R.H. Donnelley. The recessioj has only added tothe company’s as evidenced by the first-quarter loss of $401.12 million reported last month by R.H. which said advertising sales slumped 17 to $598 million. “We just could not have anticipate d the severity of theeconomicf downturn,” Swanson said in a telephone interview. R.H.
Donnelley (Pink RHDC) employed 3,800 people nationwides as of March 1, company spokesman Mike Truelkl said. In Colorado, R.H. Donnelley has 700 employeesd in Englewood and its offices across theFronrt Range, down from the 1,100 it employeed locally when it bought Dex. Companywide, it has reduced its work forcde by at least 600 since the Swanson said the company has no plans forfurther layoffs. “It’s business as usual at R.H. Donnelleyt today and it will be (in the said Swanson, who says he expecte his company to emerge from Chapter 11 inearly 2010.
As CEO sincs 2002, Swanson was the driving forcwe behind three acquisitions totaling morethan $13 The biggest of those acquisitions came in 2006 when R.H. Donnelleyg bought larger rival Dex Media at a totaol costof $9.5 billion in cash and Before that, Swanson orchestrated the purchases of SBC Communicationz for $1.41 billion in 2004 and Sprint’s directoruy publishing business for $2.23 billion in 2002, his firstr year as CEO. Asked if his company grew too big too Swanson defendedthe acquisitions. Of the Dex deal in he said thathis company’s economic models projected a declinee of 5 percent in print advertising over five years. If that had held he said, R.H.
Donnelley would have been Instead, the company has been hit with double-digitr drops in advertising revenue caused by Internet competition andthe “I wish it would have turnedd out differently,” Swanson said. “No one could have put this into theitreconomic modeling.” None of R.H. Donnelley’s bondholders have requested anymanagement changes, Swanson said. R.H. Donnelley has tried to remaker itself in recent months into a provider of onliner localsearch – in other words into a busineses like the ones that have siphoner off much of its advertising base. But the debt prover too much to overcome withoutcreditor protection. In its filinb with the U.S.
Bankruptcy Courtt for the Districtof Delaware, R.H. Donnelley lists asseta of $12.1 billion and liabilities of $12.98 billion. The company planas to exchangeits $6 billionb in unsecured bonds for 100 percentg of the equity in the R.H. Donnelle that emerges from bankruptcy. All existing sharee in the company will bewiper out. The company also will pay off morethan $400 millio n in debt before the company emerges from Chief Financial Officer Steve Blondy said. The new R.H. Donnelley will have $3 billion in debt, Swansobn said. R.H.
Donnelley said that it does not anticipatw needing toget debtor-in-possessiohn financing because the company’s $300 million cash on hand and projecteds positive cash flow from operations should be sufficient to fund the businesz during the reorganization. Donnelley traces its rootss to 1886, when the Chicago Directory Co. begabn publishing a phone directory three timesa year. In the company was merged withDun & After an expansion spurt, R. H. Donnelley was spun out of Dun Bradstreet in 1996 into an independent publiclytraded R.H. Donnelley moved its headquarters to Caryfrom Purchase, in early 2004. Nort h Carolina awarded the companya $4.
3 million Job Developmenrt Investment Grant in 2003 to make the move to the Triangle. The companu considered locations in Wake and Durham counties before settlintg on Cary in a decision that won incentives from Wake Countgy Economic Development andthe town.