For a vivid reminder of the way the Internet - combined with a vicious recession - can destroy a well-established industry, consider today’s news from the collapsing Yellow Pages business.
Idearc (IDAR.PK), a 2006 spinoff from Verizon (NYSE:VZ), late yesterday warned investors that it is considering various ways to restructure its mountainous debt; among the options its mulling are a pre-packaged bankruptcy filing; the company said if it can’t negotiate a pre-packaged deal with creditors, it might filed for bankruptcy protection anyway.
CEO Scott Klein said in a statement said the directory publisher is “making progress on our transformational and cost-cutting initiatives,” but that “the unprecedented economic challenges this nation is facing are creating never-before-seen obstacles for our clients and, as a result, for us as well.”
Also yesterday, R.H. Donnelley (OTC:RHDC), another yellow pages publisher, said it has hired Lazard as a financial advisor to evaluate ways to revamp its capital structure. CFO Steven Blondy said in a statement that the company has “significant debt maturities” coming up in 2010, and that it might not be possible refinance them given the state of the capital markets. The company said it will start talks with its banks and bondholders about “amending, refinancing or restructuring our debt obligations.”
In trading on the pink sheets, Donnelley shares are down a penny, or 10%, at 9 cents while Idearc is down 4 cents, or 43.8%, to 5 cents.