Reuters logo
Pages Jaunes investor says debt is urgent but no crisis
June 4, 2013 / 4:31 PM / 4 years ago

Pages Jaunes investor says debt is urgent but no crisis

* Cerberus’ Mayer says Pages Jaunes is long-term investment

* Wyser-Pratte seeks to rally shareholders at AGM

By Matthieu Protard and Christian Plumb

PARIS, June 4 (Reuters) - French phone directories company Pages Jaunes’ debts must urgently be cut but are not at a crisis level, key shareholder Cerberus Capital said a day before an investor showdown.

Cerberus, which owns 18.5 percent of Pages Jaunes, is expected to come under fire from activist investor Guy Wyser-Pratte on Wednesday at its annual shareholder meeting. The directories company has struggled with an outsized debt burden since a 2006 private equity buyout.

While Cerberus’s Co-head of Global Private Equity Steven Mayer agreed the 1.7 billion euros ($2.2 billion) debt had to be dealt with, he said the company had time to mull its options.

“We’ll support the management team and the board in their efforts to deleverage at some time in the future,” he said. “There’s a sense of urgency of course, but we don’t see any near-term pressure or crisis.”

Wyser-Pratte’s proposal of two independent directors was rebuffed by the company last month, but he is still expected to seek to rally shareholders against Cerberus.

The private equity group, named after the mythical many-headed dog that guards the gates of the underworld, became Pages Jaunes’ biggest shareholder through the conversion into Pages Jaunes shares of loans to its parent company Mediannuaire, as part of a broader restructuring of the holding company’s debt, also held by Goldman Sachs Group and private equity firm KKR & Co.

Wyser-Pratte, who holds 0.85 percent of Pages Jaunes stock, has called for its debt to be renegotiated to lower levels. The debt is equivalent to more than quadruple its earnings before interest, taxes, depreciation and amortisation, compared with a sector average of 0.99 times, according to Thomson Reuters data.

“The challenge for the AGM tomorrow is to unite enough minority shareholders to get the debt issue to be taken into account by Pages Jaunes and in a way that forms a counterweight to Cerberus, which in fact controls the whole company,” said a source close to Wyser-Pratte.

Mayer declined comment on possible ways to cut Pages Jaunes’ debt, 1.3 billion of which expires in 2015, such as a share issue. But he played down Cerberus’ potential to decide Pages Jaunes’ fate on its own.

He said Cerberus would expect input on key issues, but key issues were up to the company’s management and its wider board.

“We of course would expect to have some input as would any meaningful shareholder, but no more or less than our minority participation would imply,” he said.

Seeking to rebuff the notion that private equity is only out for short-term gains, he said the company’s investment horizon is generally five years or more and this case would be no different.

“We don’t have a specific timetable, but we are long-term investors and we are looking at this as a long-term investment as well,” Mayer said. ($1 = 0.7675 euros) (Editing by Lionel Laurent and David Holmes)

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below