THE owner of Yellow Pages is reportedly about to be seized by its lenders, in a deal which is set to wipe out shareholders in the group.
Hibu – which changed its name from Yell last year – is in talks over a complex debt-for-equity deal that will see creditors such as Wall Street hedge funds and banks take control of the phone books giant, according to the Sunday Times.
It is believed the agreement will reduce its debts from around £2.3bn to less than £1bn.
Once listed on the FTSE 100 Index, Hibu is now worth a fraction of its former £5bn market value.
The group, which has 13,000 staff, borrowed heavily to fund a raft of overseas acquisitions before the credit crunch struck.
It has also fallen foul of competition from internet search rivals, such as Google, which has slashed earnings.
It is thought the debt restructuring details will be announced when the company’s annual results are released on Thursday.
Hibu had 1.2 million small firms as customers and revenues of £1.6bn in the year to the end of March last year.
However, it is struggling to sustain interest payments on its mammoth debts, said to be more than £150m a year.
The firm had already warned that any debt restructuring deal was likely to leave investors with little or no value on their shares.
Shareholders have already seen the value of the stock decimated – with shares worth just 0.3p, having plunged by 85 per cent in the past year alone.
Hibu’s biggest creditors are thought to include Soros Fund Management, Deutsche Bank and US private equity firm Blackstone.
Hibu declined to comment yesterday.
The company can trace its roots back to 1930, when the Merchants Advertising Service Inc published community directories in Long Island, in the US.
In 1949, the company became known as Yellow Book, and 17 years later, the British Post Office published a classified section called Yellow Pages in Brighton’s telephone directory.
In 1973 Yellow Pages directories were rolled-out across the UK.
The Yell.co.uk service was launched in 1996, and, in 1999, Yellow Book USA was bought for $665m.
The company was renamed Yell in 2000, and, the following year, Apax Partners & Co. Ventures and Hicks, Muse, Tate & Furst bought Yell from BT for £2.14bn.
The McLeod USA Publishing Co in the US was bought for $600m in 2002. In the same year, Yell acquired the National Directory Company based in California.
Yell listed on the London Stock Exchange in 2003. A “new transformation” strategy was announced in 2011, and shareholders approved the name change to Hibu last year.