Yellow Pages waits for revamp after loss

Photo / Paul Estcourt

The Yellow Pages Group is still waiting to be restructured more than three months after it was pulled off the block.

The directories business, which revealed on Christmas Eve a $1.44 billion loss in the year to June 30 - one of the biggest corporate losses in New Zealand history - was put up for sale last year by its bankers only to be withdrawn from the market in September.

At the time, the company said it had called off the process because value expectations were unlikely to be met in the current market but it was "hoping to have a restructuring plan in place by Christmas".

Those plans include shifting its assets into a new company and putting a new board in place.

The accounts reveal just how much of a knife-edge the company is on.

They show during March and April last year the group breached its financial undertakings with its lenders, giving the lenders the right to enforce their security.

Since then it has been operating under a succession of standstill agreements.

On October 28, YPG Capital and YPG Finance also breached undertakings to provide consolidated and full-year audited accounts to their respective lenders. Standstill agreements had also been reached on those breaches.

While the company made a trading profit of $143 million, it was converted into a loss by a $1.61 billion impairment on intangibles such as goodwill and brand.

The value of Yellow Directories' goodwill and brand has been written down from $2.17 billion to $567 million.

Intangible value for its NZ Tourism Guide business also reduced from $7.2 million to $2.58 million.

The accounts state that Yellow Pages Group and its subsidiaries are likely to be sold to a new holding company along with the brand assets held under a company called YPG IP for $750 million.

After that, YPG Finance, YPG Capital and YPG IP will be placed into receivership while the YPG Share Scheme Trustee and YPG Bond Finance companies would be wound up. The company has so far spent $6.3 million on restructuring.

Yellow Pages was bought by Hong Kong-based Unitas Capital and Canada's Ontario Teachers' Pension plan for $2.24 billion in March 2007 in New Zealand's largest leveraged buy-out.

BIG CORPORATE LOSSES
* Yellow Pages Group: $1.44b loss in 2010.
* Air New Zealand: $1.4b loss in 2001 before it was bailed out by the Government for $885m.
* Bank of New Zealand: Bailed out by the Government in 1990 for $620m.
* South Canterbury Finance: $198.6m loss before the Government paid out $1.775b to depositors and first-ranking investors in 2010.