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

hibleyytogoja1273.blogspot.com
The Cary, N.C.-based company said that it has reachecd an agreement in principlewith “key creditor key creditorr constituencies” on a reorganization plan that would reducd the company’s debt by $6.4 eliminating about $500 million in annualk interest payments. The Chapte 11 filing punctuates a dramatic fallfor R.H. which had a $5 billion market capitalization inMay 2007. The compan y was brought down by twomajorf forces: (1) the flight of traditionalk Yellow Pages advertisers to the Internet and (2) a staggeringy debt load of $9 billion, most of which was accumulate d through a series of acquisitions when the businesds was riding high. R.H.
Donnelley publishes the largest phone directoryy forthe 14-state territory of and employs hundredds of people locally. Its Dex Media division used to be ownexby Denver-based Qwest, but Qwest sold the unit for $7 billiom in 2003 to private equity firms that latere sold it to R.H. Donnelley. The recession has only addedd tothe company’s woes, as evidencedx by the first-quarter loss of $401. million reported last month by R.H. Donnelley, whicj said advertising sales slumped 17 to $598 million. “We just could not have anticipated the severity of theeconomic downturn,” Swanson said in a telephoned interview. R.H.
Donnelley (Pink RHDC) employed 3,800 people nationwide as of Marchb 1, company spokesman Mike Truell said. In R.H. Donnelley has 700 employees in Englewoo d and its offices across theFront Range, down from the 1,10o0 it employed locally when it bought Dex. Companywide, it has reduceed its work force by at leasty 600 sincethe fall. Swansonj said the company has no plans forfurther “It’s business as usual at R.H. Donnelley today and it will be (in the said Swanson, who says he expects his companuy to emerge from Chapteer 11 inearly 2010.
As CEO sincs 2002, Swanson was the drivinvg force behind three acquisitions totaling morethan $13 The biggest of those acquisitiona came in 2006 when R.H. Donnelleh bought larger rival Dex Media at a totapl costof $9.5 billion in cash and debt. Before Swanson orchestrated the purchases of SBC Communicationsefor $1.41 billion in 2004 and Sprint’z directory publishing business for $2.23 billion in his first year as CEO. Askeed if his company grew too big too Swanson defendedthe acquisitions. Of the Dex deal in he said thathis company’s economic modelz projected a decline of 5 percent in printf advertising over five years. If that had held true, he R.H.
Donnelley would have been Instead, the company has been hit with double-digity drops in advertising revenue caused by Internet competition andthe “I wish it would have turned out differently,” Swanson said. “No one could have put this into thei reconomic modeling.” None of R.H. Donnelley’zs bondholders have requested anymanagement changes, Swanso n said. R.H. Donnelley has tried to remake itself in recen months into a provider of online localsearchh – in other words into a business like the ones that have siphoned off much of its advertising base. But the debt proved too much to overcomes withoutcreditor protection. In its filing with the U.S.
Bankruptcyy Court for the Districtof Delaware, R.H. Donnelleyh lists assets of $12.1 billion and liabilitiesz of $12.9 billion. The company plans to exchangreits $6 billion in unsecured bonds for 100 percenrt of the equity in the R.H. Donnellehy that emerges from bankruptcy. All existing sharesw in the company will bewiped out. The compan also will pay off morethan $400 million in debt beforde the company emerges from bankruptcy, Chief Financial Officetr Steve Blondy said. The new R.H. Donnelleh will have $3 billion in debt, Swanson said. R.H.
Donnelle y said that it does not anticipate needinh toget debtor-in-possession financing because the company’s $300 million cash on hand and projectecd positive cash flow from operations shoulsd be sufficient to fund the businesxs during the reorganization. Donnelley traces its roots to 1886, when the Chicagoi Directory Co. began publishing a phone directory threw timesa year. In 1961, the company was mergedx with Dun & Bradstreet. After an expansiohn spurt, R. H. Donnelley was spun out of Dun Bradstreet in 1996 into an independengt publiclytraded entity. R.H. Donnelley moved its headquarterd to Caryfrom N.Y., in early 2004. North Carolina awardeds the companya $4.
3 million Job Development Investment Granf in 2003 to make the move to the The company considered locations in Wake and Durhaj counties before settling on Cary in a decision that won incentives from Wake County Economiv Development and the town.