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Yell shares recover after deal glitch

Source: Reuters - Tue 27th Oct 2009

Shares in indebted Yellow Pages publisher Yell slid over 20 percent after it announced a fresh delay in debt restructuring talks, although the losses were pared as analysts remained hopeful a deal would be struck.

The company, battling an advertising slump as it negotiates a structural shift from print to online publishing, has seen its shares more than double in the last two months on hopes it would refinance its 3.8 billion pound debt.

Yell said on Tuesday it had given lenders until 5 p.m. British time on Wednesday to agree changes to its debt, required before it can push ahead with a planned 500 million pounds equity issue.

It is the second time the company has put the deadline back but Paul Richards, analyst at Numis, said the short timeframe attached to the latest delay suggested Yell was confident it would solve the problem.

"Having delayed for a week, to then come out and say 'we are delaying for two days' is very specific so I think the group must have very high confidence that they will get there on Wednesday" he said.

Shares in Yell were down 1.4 percent at 51.25 pence by 11:44 a.m. British time having recovered from a 2-month low of 41 pence hit earlier in the session.

If approved, the deal would extend the maturity on Yell's debt and amend covenants to allow the equity issue to go ahead, in return for a partial repayment of loans and increased interest margins.

The company is considering court action if it fails to gain the necessary consent, although this would delay the planned equity issue, two senior bankers close to the deal told Reuters on Monday.

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