Financial News

LONDON (ShareCast) - Shares in Yell fell after the Yellow Pages publisher said it has started talks with its banks over a comprehensive refinancing, adding that trading in the second quarter of this year took another lurch downwards.

Yell is to hold "discussions with its debt holders with a view to extending the maturity and changing the terms of its debt facilities and, in due course, to discussions with its principal shareholders," it said.

These discussions and the resulting processes are expected to until the Autumn to complete. The group warned last week it could breach its bank covenants due to tough trading conditions.

Yell reported a loss before tax in the year to 31 March 2009 of £1.14bn, compared with a profit of £206.7m the year before. At the year-end, the group had net debt of £4.2bn.

Today, the directory publisher added that while first quarter trading is in line with its recent forecasts, second quarter trading is well below last year.

At constant exchange rates, first quarter revenues are expected to be around 11% lower and underlying profits around 20% lower than the comparable period last year. Reported results, reflecting the benefit of the weaker pound, are expected to show revenues up by around 1% and EBITDA (underlying profit) down by around 10%.

Second quarter revenues, however, have fallen by 17% and underlying profits are expected be around 30% lower than the comparable period last year.

This latest trading downturn has put more pressure on Yell's bank covenants. At the end of June Yell had 14% leeway, but by the end of September this will have dropped to just 7%.

"The group's cash flows and cash conversion remain strong, and Yell continues to expect to make further repayments of debt after meeting all interest payments," Yell's statement said.