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Telephone directory publisher Yellow Media announced it’s cutting its annual dividend to 15 cents from 65 cents, after it posted a second-quarter loss of $20.7 million or five cents per share. The company is carrying a more than $2 billion debt load.
CEO Marc Tellier tells BNN the board made the difficult decision to make a meaningful cut to our dividend, which will free up $260 million in cash per year – over three years, that’s $850 million – plus $700 million in proceeds from the Auto Trader divestiture, which will go towards addressing the company’s debt. “We have decisively addressed the fact we needed to reduce our leverage,” he says.
Yellow Media is also withdrawing its outlook for the remainder of the year and will no longer give forecasts. Standard and Poor’s cut its corporate credit rating to BB+ from BBB-.
Tellier points to the company’s expanded offerings, which includes the acquisition of deal site RedFlagDeals, and Yellow Pages mobile site - as well as becoming a major search engine reseller. He says the company remains committed to its business strategy. “Our business strategy is grounded in the fact that small to medium sized business in this country is overwhelmed and underserved in terms of digital media choices.”
He adds that the business transformation isn’t news – everyone knew there would eventually be a tipping point a number of years ago. “This business was going to morph to more of a digital business. We’re at the apex of transformation right now, it’s not panic stations. We can only focus on what we can control,” he says.
“And candidly, on what we control, we’re not disappointed.”