YLO Scuffling

The Financial Post had a piece by Barry Critchley on August 15:

Late Tuesday, the syndicate of lenders to Yellow Media issued a statement saying it “would be best for the company to withdraw its proposed Canada Business Corporations Act plan of arrangement and to enter into further negotiations with its stakeholders. The syndicate is of the view that certain aspects of the proposed plan can be improved upon for stakeholders.”

Earlier this month, the syndicate filed a motion in the Quebec Superior Court asking the interim order granted to Yellow Media be revoked. That motion, together with a similar motion filed by the convertible debentureholders, was essentially held over until after the Sept. 6 vote of security holders.

In Tuesday’s statement , McMillan LLP, counsel for the lenders, noted Yellow Media’s Q2 results showed “the company continues to generate significant cash flows,” adding Yellow Media did not include cash flow forecasts as part of the information circular filed with the court on Aug. 3. Accordingly, “the company’s future cash flow forecasts should be disclosed to affected stakeholders so that they can better assess the merits of the company’s proposed plan.”

The McMillan statement notes:

The Syndicate’s objective is to work with the other stakeholders on a more level informational playing field to develop a plan that could be lawfully implemented and that would allow the Company to pursue its business plan, while still reflecting prudent commercial lending standards and an appropriate allocation of value for senior creditors. Such a plan could offer junior creditors and equity holders an opportunity to retain a material stake in the Company with upside in the future.

Implementation of the Company’s current plan is not urgent. The Company has disclosed that it does not project any imminent cash shortfall.

PricewaterhouseCoopers Inc. (“PwC”) is assisting the Syndicate in developing a response to be provided to the Company on its reorganization plan. Interested stakeholders are invited to contact PwC to share their ideas and views.

With no specific contact information provided, one wonders just how eager the principals are to have ideas and views shared with them! A search for “yellow” on their Canadian website doesn’t yield much joy!

In another story, Barry Critchley also highlighted the efforts of Glen Bradford:

If nothing else Glen Bradford, a U.S. investor based in Indianapolis, is determined. And he has a plan to show that determination: to get proxies from owners of 5% of the shares at Yellow Media to call a special meeting of the company that has put forward a recapitalization proposal to be voted on early next month.

Bradford, who owns more than 250,000 Yellow Media preferred shares — and who claims that he has received proxies for more than two million in total — wants shareholders to fill out a form “so that I can call a shareholder meeting with the sole purpose of ensuring that there is a management team in place that understands what fiduciary responsibility is and understands who owns the company.”

Bradford advises the potential form-fillers that “by filling out this form, you agree to oppose the recapitalization plan and believe that it is a breach of fiduciary

Mr. Bradford’s interest in Yellow Media has been discussed on PrefBlog in the post YLO: The Jostling Starts, the Rumours Swirl:

There doesn’t seem to be much on the web about Glen Bradford or ARM Holdings by way of performance numbers, but I dug up his resume.

Since that post, the website has been abandoned and the link is broken.

Somebody using a gMail address purporting to be Mr. Bradford contacted me last night and asked me to post a link to his petition:

If you fill out this form and do not attend the meeting in person, I, Glen Bradford, will assume responsibility for your shares and vote according to my perception of what is best for common shareholders.

By filling out this form, you agree to oppose the recapitalization plan and believe that it is a breach of fiduciary responsibility.

Fill out what you can. I am going to need to be able to tie the share ownership back to you to call the meeting.

I really wouldn’t want to guess whether filling out the form is a valid form of proxy. I think the answer is probably no. I suggest that if you want to give Mr. Bradford your proxy, you should specify this on the form provided to you by the company – but not only am I not a lawyer, but the person purporting to be Mr. Bradford advises me that in addition to not having a website, he also doesn’t have a lawyer. He does, however, have a link to a resume.

I have verified that there is an “ARM Holdings LLC” with CEO Glen Bradford that has filed a Form D with the SEC. but what checking the SEC did and whether there is any connection between the filer of the form and the guy getting all the ink from Barry Critchley is something I simply do not know.

I’m not filling out the Internet form, nor will I be naming Mr. Bradford my proxy when I fill out the proxy documents. While I wish him the best of luck, the campaign is just a shade too Mickey-Mouse for my tastes.

YLO has four series of preferred shares outstanding: YLO.PR.A, YLO.PR.B, YLO.PR.C and YLO.PR.D. I recommend that preferred shareholders vote against the plan, on the grounds that they are being treated as if they have all be forcibly converted into common at the YLO.PR.A / YLO.PR.B rates prior to the conversion of the old common into new securities. That’s reasonable for YLO.PR.A and YLO.PR.B, but not so much for YLO.PR.C and YLO.PR.D, which are not convertible by the company. And, even for the A & B holders – you’re not getting paid to vote yes, so why give it away? If the company wants a yes vote from you, they should provide a little sweetener; the offer that’s on the table is already a worst-case scenario.

One Response to “YLO Scuffling”

  1. […] have previously recommended that preferred shareholders should vote against the plan: YLO has four series of preferred shares outstanding: YLO.PR.A, YLO.PR.B, YLO.PR.C and YLO.PR.D. I […]

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