TORONTO U.S. telephone yellow-pages publisher Idearc Inc IDAR.PK filed for bankruptcy, as revenue for its printed directories business dwindled amid a shift to online search and advertising.
Idearc said on Tuesday that it filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code, and that it reached an agreement with lenders on some critical elements of a reorganization plan.
The company said that under the agreement with its lenders, its total debt will be reduced from around $9 billion to around $3 billion of secured bank debt, with a 12 percent interest rate and a 6-year term.
The company said it will not obtain debtor-in-possession (DIP) financing during the reorganization, and that it has substantial cash balances and generates positive cash flow.
"Essentially we have a company with good potential being held back by a terminally ill balance sheet," Chief Executive Scott Klein said in a statement.
Idearc said it expects to file a reorganization plan in around 30 days, and that it plans to operate business as usual throughout the restructuring process.
Upon emergence from bankruptcy, Idearc will have a cash balance of $150 million, it said. Lenders have agreed to continue funding its operations from Idearc's cash collateral balance of over $600 million, excluding $250 million of cash collateral that will be paid to the lenders as protection.
Idearc and rival R.H. Donnelley RHDC.PK had both announced earlier this month that they were undertaking restructuring efforts with bondholders as they grappled with debt and dwindling revenues.
Idearc was spun off from Verizon (VZ.N) in 2006.
(Reporting by Ritsuko Ando; Editing by Tim Dobbyn)