UPDATE 1-Yell makes changes to loan amendment request

Fri Dec 9, 2011 8:16am EST

By Isabell Witt

LONDON Dec 9 (Reuters) - British yellow pages publisher Yell Group has made changes to its 2.6 billion pound ($4.1 billion) debt amendment request after failing to receive majority support from its lenders, according to a letter sent by Yell to its lenders.

Yell is now proposing to reduce the 172.6 million pound revolving credit facility to 75 million after institutional loan investors were unhappy with the previous request to reduce it to 30 million.

The changes come as credit funds and collateralised loan obligation funds feel the RCF reduction constituted a par value repayment benefiting Yell's bank lenders, while funds would receive a loss-making repayment through a discounted buyback of Yell's other term debt.

Revolving credits are typically provided by banks, while term loans are held by institutional loan investors.

Yell said in its letter, seen by Thomson Reuters LPC, the reduction of the RCF was necessary to receive relevant audit approvals and to save costs.

"The current RCF is costing the group close to 2 million pounds per annum in commitment fees which management believes is an expense that can sensibly be reduced", Yell said in the letter.

The group, implementing strategic changes to shift to online from print, also offered term loan holders an additional 25 basis points on top of a 50 bps fee proposed in November.

Yell issued its request on Nov. 14, asking its 300-strong lender syndicate to reset the net debt to earnings (EBITDA) covenant until 2014 to avoid a covenant breach, reduce the amount of its RCF to save costs, and buy back debt at a discount.

"This should now go through. They were close last time," said a source close to the amendment process. The amendment needs consent from 66.6 percent of lenders.

MORE COVENANTS

Yell has also offered to add more loan covenants to ensure at least 50 million pounds cash stays on the balance sheet at the end of each month. Lenders were concerned the proposed 108 million pound debt buy-back would threaten Yell's liquidity position.

The group will also agree not to use drawings under the RCF to fund debt purchases.

After extending a deadline for consent twice, Yell has now asked lenders to respond by Dec. 16.

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