(Adds context, CEO, share price drop)
PARIS, Feb 13 (Reuters) - French online classified ads and directories group Solocal, formerly known as Pages Jaunes, plans to raise new capital and reschedule its debt to improve its finances in a bid to return to growth after five years of shrinking sales.
Solocal said it planned to launch a discounted capital increase of 440 million euros ($598 million) that is is fully subscribed and guaranteed by three of the group’s major shareholders and five institutional investors.
Solocal also said it would start discussions with its lenders to extend its debt maturities from September 2015 to March 2020 in exchange for a repayment of 400 million euros.
The share issue will be priced at between 20 and 50 euro cents per share, it said. The company’s stock fell about 9 percnet to 1.30 euros after the announcement.
The group has been handicapped by high debts since a leveraged buyout by private equity funds in 2006, and has suffered as its once-core printed directories business stumbled in the transition to the web.
“For several years,we’ve managed the company with cash as a priority to pay back our creditors,” said Chief Executive Jean-Pierre Remy. “From today, returning to growth becomes our only priority.”
A debt downgrade note from rating agency Moody’s in December expressed concern about the company’s declining operating performance and said it feared a breach its debt covenants.
Solocal, which operates websites with real estate and job listings as well as on-line mapping service mappy.fr, primarily earns revenue from selling advertising. Revenues fell 5.8 percent last year to 999 million on a comparable basis, with 63 percent from on-line ads.
Operating income dropped 19 percent to 329.2 million euros because of restructuring costs and investments in the Internet business. Net income fell 27 percent to 114.8 million euros
Solocal also confirmed its 2014 outlook for sales to fall 3 to 6 percent and for gross operating margin between 355 to 375 million euros.
The group’s shares closed at 1.42 euros on Wednesday, giving it a market capitalisation of 398 million euros.
$1 = 0.7359 euros Reporting by Gwenaelle Barzic, Leila Abboud, and James Regan; Editing by Andrew Callus