WILMINGTON, Delaware (Reuters) - Truvo USA TRUVO.UL, the holding company for European directories publisher Truvo, filed for U.S. bankruptcy protection on Thursday with a plan to turn the company over to senior lenders, according to court documents.
The recent recession accelerated a shift among advertisers away from Truvo’s printed yellow-and-white-pages directories in Belgium, Ireland and Portugal to the Internet, it said.
Truvo USA filed for bankruptcy with a proposal that would transfer ownership of the reorganized company to holders of its 777.6 million euros ($964.2 million) of senior loans.
The company is currently owned by funds associated with Apax Partners and Cinven. The private equity funds acquired the former VNU World Directories in 2005 for about 2 billion euros.
The company said its assets are worth about 1 billion euros and it estimated its liabilities at about 1.7 billion euros.
Truvo’s operating companies did not file for bankruptcy.
Putting the holding company Truvo USA LLC in bankruptcy in the United States, even though it has no operations there, allows Truvo to quickly restructure its debt.
The company staked out potential battle lines in its initial filings.
It asked the judge, Arthur Gonzalez, to prevent creditors from taking legal action against the company’s European operations, naming dozens of financial institutions in the request, including units of Goldman Sachs Group Inc (GS.N), Deutsche Bank AG (DBKGn.DE) and Barclays Plc (BARC.L).
“Over the past three years, the Truvo Group has experienced declines in print usage of up to 25 percent per annum in key markets,” the company said.
Like other directories companies such as Dex One Corp DEXO.N (formerly RH Donnelley Corp), Truvo’s growing online business has failed to offset the rapid decline in its print business.
The company said it has retrained its 1,700 staffers for Internet advertising and launched new products to help advertisers reach online consumers. However, it said it realized it could not generate enough cash and needed to restructure its debt.
In addition to the equity, the senior lenders would get 350 million euros of new senior debt and 100 million euros of junior debt.
Lenders would have the option of accepting additional debt in lieu of stock.
Holders of at least 70 percent of the company’s loans have agreed to the reorganization, according to court documents.
The company said it has been negotiating with noteholders since March, but its plan has the support of only three investors who hold 15 percent of its notes. All three are affiliated with Elliott Management Corp.
The company said it has all the support of creditors it needs to confirm the plan, and the support of noteholders is not required because they are not “in the money.”
The company’s plan would still offer the noteholders a recovery — but only if they voted for the plan.
Under the plan, holders of the company’s high-yield notes would get warrants for up to 14 percent of the reorganized company and 15 million euros in cash.
The company issued 395 million euros and $200 million of high-yield notes in 2004.
Holders of the company’s junior unsecured loan, with an outstanding balance of 173 million euros, would get warrants for up to 1 percent of the reorganized company.
The senior lenders include units of JPMorgan Chase & Co (JPM.N), Allied Irish Banks Plc ALBK.I, Elliot Management Corp, Commerzbank AG (CBKG.DE), Credit Suisse Group AG CSGN.VX, Nomura Holdings Inc (8604.T) and dozens of funds that invest in loans.
Truvo, which listed four affiliates in its Chapter 11 petition, said its operating subsidiaries are not part of the bankruptcy proceeding.
The case is In re: Truvo USA LLC, U.S. Bankruptcy Court Southern District of New York (Manhattan), No: 10-13513.
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Additional reporting by Santosh Nadgir in Bangalore; Editing by Gerald E. McCormick and John Wallace