PrefBlog

DBRS has announced that it:

DBRS has today downgraded Yellow Media Inc.’s (Yellow Media or the Company) Issuer Rating to C (high) from CCC; its Medium-Term Notes rating to C (high) from CCC, with an RR4 recovery rating; and its Exchangeable Subordinated Debentures rating to C (low) from CC (high), with a recovery rating of RR6. DBRS has also placed these ratings and Yellow Media’s Cumulative Preferred Shares rating of Pfd-5 (low) (already at the lowest rating on the scale) Under Review with Negative Implications.

The downgrade follows the Company’s announcement of a recapitalization plan (the Recapitalization), which is intended to restructure the balance sheet in a manner that would better enable Yellow Media to focus on the transformation of its business from print to digital. DBRS notes the recapitalization proposal (see key components below) would result in a default, based on the fact that lenders would receive less than originally intended interest and principal repayment if the offer is approved in a vote on September 6, 2012.

The revised ratings have been placed Under Review with Negative Implications in consideration of the pending stakeholder vote on September 6, 2012. Should the proposal be approved, Yellow Media’s exchanged securities would be placed in default status in accordance with DBRS policy.

S&P has announced:

• Montreal-based classified directory publisher Yellow Media Inc. announced an offer to exchange its existing unsecured debt (credit facilities and medium-term notes) for new senior secured notes and subordinated unsecured exchangeable debentures, as well as cash and common shares.
• The company has also offered holders of existing convertible subordinated debentures, preferred shares, and common shares an exchange for 17.5% of the new common shares as well as warrants representing 10% of the new shares.
• We view the offer as a distressed exchange under our criteria and have therefore lowered our long-term corporate credit rating on Yellow Media to ‘CC’ from ‘CCC’.
• At the same, we lowered our issue-level rating on the company’s senior unsecured debt to ‘CC’ from ‘CCC’ and lowered the issue-level rating on its convertible subordinated debentures to ‘C’ from ‘CC’. The recovery ratings on these securities are unchanged at ‘4’ and ‘6’, respectively.
• We are removing the ratings from CreditWatch.
• Should the company complete the exchange as proposed, we would lower all ratings to ‘D’.

YLO has the following preferred shares outstanding: YLO.PR.A, YLO.PR.B, YLO.PR.C and YLO.PR.D. The proposed recapitalization has been discussed on PrefBlog.

This entry was posted on Tuesday, July 24th, 2012 at 11:07 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.