Seat Pagine Gialle SpA (PG), whose bondholders agreed this month to a 1.28 billion-euro ($1.7 billion) debt-for-equity swap proposal, may take seven months to complete the plan, its chief executive officer said.
Junior bondholders are set to receive stock representing 88 percent of Italy’s largest directory publisher in October, Alberto Cappellini said in a telephone interview. The stake held by the current biggest shareholder, a group including CVC Capital Partners Ltd., will drop to 6 percent from about 50 percent.
Turin-based Seat Pagine, which began negotiations on its debt a year ago, said last week that its debt restructuring plan won the backing of more than 97 percent of senior bondholders, the last class of creditors required to approve the proposal. Phonebook publishers in Europe have been struggling as users and advertisers ditched printed directories for online searches.
“My focus is getting back on the business,” the CEO said yesterday. “In the past six months, I spent 80 percent of my time on the restructuring and 20 percent on running the business, from now on it will be the other way round.”
Seat Pagine is set to release results for 2011 in April and earnings and sales will be in line with the company’s forecasts, the CEO said. Earnings before interest, taxes, depreciation and amortization will be “halfway” in the company’s projected range of 365 million euros to 385 million euros, he said.
Seat Pagine has beefed up its Internet offerings. Last year online revenue exceeded print sales for the first time, Cappellini said. The company plans to generate 80 percent of revenue from the Web in 2015 and is still evaluating whether to purchase Glamoo, a company it has a couponing partnership with.
“Entering in a massive way into e-commerce is strategic for us,” the CEO said. An accord with Google Inc. (GOOG) to offer its clients campaigns based on the AdWords advertising system for Internet searches in addition to its own services in Italy is also “going very well,” Cappellini said.
Senior bondholders have to formally sign off the plan at a meeting on March 29 or 30. Seat Pagine investors will also be asked to approve the proposal at a shareholder meeting in May or June, the CEO said.
“There will be formal and implementation steps in coming months that will take time but the bulk of the work has been done,” Cappellini said. “The company is halving its debt and the new capital structure will be much more balanced and allow it to seize growth opportunities.”
The company said March 2 it got “full support” for the debt proposal from its controlling investors CVC, Permira Advisers and Investitori Associati.
After the deal, Seat Pagine will still have about 1.4 billion euros of debt, which is “completely sustainable,” Cappellini said. Borrowings will be below 4 times net debt to Ebitda, he said.
“We may seek to refinance the outstanding debt between now and 2016 if there are opportunities,” the CEO said.
The publisher is still considering the sale of its stakes in directory-service provider Telegate AG (TGT) and Thomson Directories Ltd. in the U.K., the CEO said, adding that these deals wouldn’t happen before October.
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