July 24, 2012 / 5:35 PM / in 6 years

Yellow Media shares fall on doubts over recap plan

July 24 (Reuters) - Shares of heavily indebted Yellow Media Inc fell 29 percent on fears that some of its lenders may reject the telephone directory publisher’s recapitalization plan.

Yellow Media said on Monday it plans to exchange C$1.8 billion of its credit facilities and medium-term notes for senior secured notes, subordinated unsecured exchangeable debt, new common shares and cash to cut debt and extend debt maturity.

Desjardins Capital Markets analyst Maher Yaghi said the company’s bank lending syndicate and holders of its medium-term notes could oppose the exchange offer.

Yellow Media’s marketing communications director Andre Leblanc declined immediate comment.

Standard & Poor’s Ratings Services, which called the debt exchange offer “distressed”, lowered its long-term corporate credit rating on the company to ‘CC’ from ‘CCC’ on Monday.

S&P said it could cut its debt rating on the Montreal-based company, which has been struggling to move its telephone directory business away from print to an online model, to ‘D’ if the exchange is completed as proposed.

Shares of Yellow Media, with a market value of about C$19 million, were down 23 percent at 6.5 Canadian cents in afternoon trading on Tuesday on the Toronto Stock Exchange.

The stock earlier fell to a low of 6.0 Canadian cents, making it one of the top percentage losers on the exchange. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Sriraj Kalluvila)

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