R.H. Donnelley, a white- and yellow-pages directory firm, has filed for Chapter 11 reorganization protection in the U.S. Bankruptcy Court for the District of Delaware.
According to a company statement, management has reached an agreement with key creditors to reduce its debt by approximately $6.4 billion, eliminate $500 million in annual expense income and extend loan maturing dates to 2014.
The company anticipates being able to conduct business as usual during the bankruptcy proceedings. It announced that it has more than $300 million in cash on hand, and has positive cash flow from operations. It will not be seeking debtor-in-possession financing during its reorganization.
In its most recent quarterly financial statement, the company listed $12.1 billion in assets and just under $13 billion in liabilities. The liabilities included $9.6 billion in long-term debt.
It generated $602 million in first-quarter revenue, down from $674.7 million a year ago, and took a net loss of $401.2 million, down from $1.62 billion loss in first-quarter 2008.
“Our growth-through-acquisition strategy never anticipated the cataclysmic collapse of the U.S. economy and the local advertising market,” said David C. Swanson, R.H. Donnelley’s chairman and CEO, in a statement.
“As a result of these developments, earlier this year we began negotiating with our lenders to structure our debt and provide the company with a more sustainable capital structure that reflects the current economic realities,” Swanson added.
In a letter to the company’s business contacts, Swanson said the restructuring was being done “primarily to restructure our balance sheet.” The company does not anticipate any impact on its business operations, he added.
“We will honor all existing customer agreements,” Swanson added. “We have already requested court approval to honor all customer credits, adjustments and prepayments in the ordinary course of business, and we expect this request will be granted shortly.
“Our suppliers will be paid for all goods provided and/or services rendered on and after May 29, 2009, in the ordinary course of business.”
But according to a question-and answer page on the R.H. Donnelley Web site, “our bankruptcy filing means that any payments owed by R.H. Donnelley to a vendor for goods and services provided prior to the filing cannot be paid at this time. These are considered ‘pre-petition’ claims and vendors seeking payment for such claims must do so through the Chapter 11 process.”
Additionally, the Web site indicated the company expects to emerge from the bankruptcy within 8 to 12 months; that it has filed motions to honor all advertising contracts, customer programs and promotions, rebates and credits consisted with past practices; and that it is not contemplating any asset sales and that it does not anticipate the need to sell any assets as a result of the restructuring.
The company’s stocks and bonds will be cancelled upon the company’s emergence from bankruptcy.
Sidley Austin LLP is serving as the company’s lead restructuring counsel.
