Interview with Bondholderhttps://video.ca.msn.com/watch/video/yellow-media-bond-holders-unite-04-04-12-2-20-pm/jvmk4ys3?cpkey=0ef995dc-9775-46a3-9240-6b46f68bb7d9%7C%7C%7C%7C
Notes from interview with Paul Gardener Avenue investment management
*Bondholders stronger in a voice of one
*Attempt to organize one stronge voice
*bank lenders and unsecured debenture holders at same level from a capital structure point of view
*If it goes to CCAA they want to be able to go in together rather than fight one another
*They are like the first mortgage on a house
*Bank lenders & unsecured debenture holders are at the same level than follows the convertible debenture holders, than preferred share holders, than common share holders
*based on value bondholders place on the company they place little if any value on the preferred and the common
*Unusual situation because they are still making interest payments and still making money and still haveing free cash flow and still have EBITDA but everyone knows they will hit a liquidity wall in 2013
*Will play out over the next year
*they are not in default
*the day they don't pay their interest payments they will be in default
*the idea is to restructure before they go into default and everything goes crazy
*want to restructure it into something that makes sense and is not volatile
*early days and couldn't speak for the group
*his own opinion was best case scenario they keep paying the bondholders and life goes on. If it does go poorly than the idea is that the debt holders would be first in line and take over the company.
*Certain methods of valutation place assets at fair market value 1 to 3 times EBITDA. They earn about 500 to 600 EBITDA. Therefore worth 1.2 to 1.7 billion dollars. Currently 1.4 billion of debt outstanding. So technically the debt holders should be made whole.
*The caveat is that the business plan is decreasing. Print media decelerating faster than online revenue increasing.
*All bond holders care about is being first in line. They did not participate in share value doubling or trippling on the way up. All they care about is principal
*has no concern for capital structure lower than his own
*Hopes to have resoltion sooner rather than later.
*Could play out another year or year and half
*probably a resolution in the next 3 to 4 months
*******************************************************************************************************************