Written by admin on June 11th, 2009
RH Donnelly Files Bankruptcy
In one of the latest ripple effects of economic recession, publisher R.H. Donnelley Corporation, the company responsible for publication 600 directories including telephone Yellow Pages, officially filed for bankruptcy protection from creditors in order cut its outstanding debt by about $6.4 billion even as it continued suffering other losses.
As of December 31, 2008, the North Carolina-based company held assets worth $11.9 billion while its total debt exceeded $12.4 billion according to figures released from Chapter 11 documentation.
The documentation also included testimony of R.H. Donnelley management, which blamed the filing on drastic reductions in its advertising sales revenue due to the recession and growth in the local business advertising industry that created fierce competition.
Donnelley suffered 401 million net losses in the first quarter while total revenues fell 11% to $602 million. Total net losses for 2008 amounted to $2.3 billion.
Back on May 14, the publisher said that lenders and bondholders had reached an agreement not to forbear until May 28 and would not seek to collect on missed debt payments.
R.H. Donnelley has intentions to file a disclosure statement and reorganization plan within a 60-day period. This move will cut debt by about $6.5 billion, including secured debts totally about $700 million. Under this plan, approximately $6 billion of unsecured bond debt would be exchanged for all of the equity in the reorganized publisher and $300 million in unsecured notes.
According to Donnelley’s CFO, Steve Blondy, the deal would be a very substantial pre-arrangement that would allow trade creditors to recovery most, if not all, of what they are owed.
“R.H. Donnelley expects to emerge from bankruptcy shortly after the start of 2010 with more than $100 million in cash on hand,” Blondy said.
“We have a very good business model; operations continue to be good,” said Donnelley CEO, David Swanson in a recent interview. He added, “We never anticipated the economic downturn and the condition we find the financial market in today.“
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