(Adds stock market regulator Consob banning short-selling)
By Danilo Masoni and Natalie Harrison
LONDON, Jan 29 (IFR) - Seat Pagine Gialle's bonds
slumped by a third in the debt markets on Tuesday after the
Italian phone directory firm suspended an interest payment just
five months after a drawn-out debt restructuring.
Seat PG said its 2011-2013 business plans were under review,
as were its 2015 targets, but also said it had the resources
to honour upcoming debt maturities.
Like other directories firms, including France's PagesJaunes
and Yell in the UK, Seat PG has been struggling to
reduce debts and fight competition from Internet search giants
such as Google.
The company's plight has been made worse by a weak Italian
economy and a decline in print advertising sales. It said
advertising sales were down 23 percent in November compared to
the same month a year earlier.
Seat PG was due to make a 42-million-euro interest payment
on a 788 million euro ($1.06 billion) senior secured bond on
Jan. 31. This has been suspended, but the company has a 30-day
grace period before non-payment triggers a default.
The bond, which matures in January 2017, slumped to just 39
percent of face value on Tuesday, according to Tradeweb.
"The new management is taking a view on how the company is
doing, and although it has cash, whether it makes sense to use
that to pay the debt interest," said one source familiar with
the situation. "There was always the expectation that a further
restructuring would have to be implemented," the source added.
Seat PG was left with heavy debts after a 5.7 billion euro
leveraged buyout in 2003 by private equity firms CVC, Permira
and Investitori Associati.
The completion of a lengthy debt restructuring last year cut
Seat PG's leverage to around 3.7 times earnings before interest,
tax, depreciation and amortisation (EBITDA) from 7.0 times. But
that leverage ratio is expected to rise again as earnings remain
BONDS, SHARES FALL
The company is also due to make a decision on whether to
make a 6.3 million euro interest payment on a portion of its 686
million euro loans.
A decision on the interest payments will depend on the
outcome of Seat PG's business review but will come before the
end of the grace period. Its board will meet next before Feb. 6.
Seat PG's shares closed 41 percent lower on Tuesday, and
stock market regulator Consob said it has banned short-selling
on the stock as of January 30.
Seat PG's loans were bid at 43, down from 65.5 on Monday,
according to Thomson Reuters LPC data.
The company had completed a 19-month restructuring of 2.7
billion euros of debt last August, including a 1.3-billion-euro
subordinated bond, known as the Lighthouse bond, and 720 million
euros of senior loans, after suspending interest payments on the
subordinated bond in 2011.
Bondholders became the owners of the company by swapping
around 1.2 billion euros of claims into 90 percent of voting
Minority shareholders are due to attend a hearing in the
District Court of Rome on Tuesday after filing a motion that
includes seizure of the company's assets.
Seat said: "The company is convinced that the motion is
without merit and shall seek the dismissal of the case based on
PagesJaunes in France is also in the process of
restructuring its debt where lenders will swap debt for equity.
Mediannuaire, the KKR and Goldman Sachs Capital
Partners-controlled holding company that owns 54.7 percent of
the French directories firm, obtained 90 percent of senior
lender consent for a restructuring plan earlier this month.
That will pave the way for a debt-for-equity swap through a
fast-track court procedure.
($1 = 0.7429 euros)
(Reporting by Reuters's Danilo Masoni and Natalie Harrison of
IFR Markets; additional reporting by RLPC's Isabell Witt;
Editing by Tom Pfeiffer, Jane Merriman and Chizu Nomiyama)