Yell refinances with share issue

By Georgina Prodhan

LONDON (Reuters) - Struggling yellow-pages publisher Yell Group (YELL.L) set out the last stage of a protracted refinancing on Tuesday with a larger-than-expected fully underwritten share issue.

Taking advantage of renewed market appetite for equity, Yell said it would sell 659 million pounds worth of stock, raising a net 574 million after expenses to pay down some of its 4 billion pound debt pile.

Yell joins a growing list of companies such as transport group National Express Plc (NEX.L) and electronics group Laird Plc (LRD.L) which have said in recent weeks they are issuing equity to cut their debts.

"This is basically taking debt off the agenda," Yell Chief Financial Officer John Davis told Reuters in a telephone interview on Tuesday.

Yell shares, which have recovered from lows around 21p seen earlier this year, rose as much as 16 percent in early trade but by 3:05 p.m. were up just 2.2 percent at 45.96 pence, outperforming a flat European media index .SXMP.

Like other directories groups, Yell has had to contend with spending cuts by the small businesses on which it depends for classified advertising revenue, as well as increasing online competition from Google Inc (GOOG.O) and others.

One banker said on Tuesday: "This is a really tough business model that slowly declines until it blows up."

"Our trading desk have been advising people to buy the A loan and short the equity which means that we're confident that the business is able to operate and make cash, but have no confidence in its longevity."