what Yellow Media said Lots of people here complained the Yellow Media didn't say anything new in the conference call. That's not true.
Before the conference call, they changed the debt vote to say that a yes vote will also count as approval if they later present a similar plan under CCAA. (They didn't need to do this for the equity vote because under CCAA the equity holders don't get a vote. If the debt holders get less than 100% of par value, the equity holders can get zero and that will be OK.) I previously asked what their Plan B is. Now we know.
In the conference call itself, Tellier said:
They spent 9 months developing this plan. This is an argument against anyone who thinks Yellow Media can develop and get approval for an alternative plan in just a couple of months. The clock is ticking. Within 3 months, YLO must announce the conversion of Pref A. In 5 1/2 months, they must pay back the banks in full unless there is another agreement.
YLO expects it will take time for the revenue increases from online to balance the revenue declines from print. This is an argument against anyone who thinks YLO's top line revenue has already stopped shrinking or will stop shrinking soon. He didn't say how fast revenue is expected to decline, and if you believe the decline rate will be 10% per year or less you might think the company doesn't need a restructuring, but Tellier is directly arguing against anyone who thinks the revenue decline is over.
YLO has too much debt. "It is obvious to all and it is a source of substantial risk." Indeed, it should be obvious to all but this is an argument against Bradford's claim that YLO's debt level is just fine.
YLO can't get new capital on a cost-effective basis because its debt trades at 55 cents on the dollar, it has a CCC credit rating, and its common share price is tiny. This is an argument agianst the fantasy that YLO can get new money from a bank, fund, bond, or share issue.
Over 44% of debt comes due within the next 18 months and the company would have great trouble refinancing any of it. We already knew this, but it's worth saying again.
"Debt will be reduced by approximately $1.1 billion, $1.5 billion if you include the Series 1 and 2 preferred shares which are accounted for as debt under GAAP". This is an argument against a handful of deeply deluded people who believe that Pref A and B are debt. They are not debt but receive the same accounting treatment as debt.
"The annualized interest burden will be reduced by approximately $45 million'. We knew this already, but it's an argument against everyone who suggested that the interest charge will rise. (The interest rate will be higher, but the principal will be much lower so the total interest charge will be lower.)
Because customers and suppliers can easily assess the company's financial situation, YLO must act well before the first day when they would miss a debt payment. This is an argument against everyone who says that a company that's on a path to miss the 2014 debt payment has no urgent need to restructure. YLO will repeat this argument when they go up against the banks.
If the deal isn't approved, YLO may need to immediately implement an alternative plan that is less favourable to YLO and the stakeholders. This presumably means CCAA.
YLO considered various alternatives including refinancing of existing debt, extending current debt maturities, buying back debt on the open market, and partial recapitalization. This answers the question of what alternatives they considered.
The MTN holders have given common shareholders a lot more than they usually get in this sort of deal. (To be fair, the company is in less dreadful condition than usual too since it has strong positive cash flow.)
The plan that they selected "reduces balance sheet risk". This is an argument against the idea that YLO should essentially play chicken with the MTN holders, hoping that their numbers are bad enough that they can buy back debt at a deep discount but not bad enough to make the company default. They don't want to run a company that is always on the verge of bankruptcy.
I agree that we didn't get answers to all of our questions, but we did get some useful information.