Yellow Media to take $2.9B charge, stop dividends
7:21 AM, E.T. | September 28, 2011Canadian
Yellow Media Inc (YLO-T) said on Wednesday it would take a $2.9 billion charge in the third quarter, driving its shares down by more than 50 percent in the latest blow to the debt-laden Canadian telephone directory publisher.
Yellow also said it will stop paying dividends after its October payment as it struggles to switch from print to a digital platform, while trying to manage its debt. The company gets about three-quarters of its revenue from selling advertisements in its Yellow Pages and related business directories.
Shares in the company were down 40 percent at 34 cents in opening trade on Wednesday on the Toronto Stock Exchange after plunging more than 50 percent at the open. They were worth around $14 in late 2007
"The last few months and the last week have been very challenging and we are disappointed with the performance of our securities as regards to all of our stakeholders," Yellow Media President and Chief Executive Marc Tellier said on a conference call with analysts before the market opened.
"In essence, our message today is one of conviction," he said. "One of conviction that we have the right strategy and focus around our business transformation."
Tellier did not provide further details, however, ending the brief call with analysts abruptly and with the promise to provide further details on the company's transformation in November, when it publishes third-quarter results.
In a statement earlier in the day, the directory publisher said the non-cash charge would not affect the company's operations.
It said a $0.025 dividend per common share announced in August remains payable on October 17.
In August, Standard & Poor's Ratings Services cut its credit rating on Yellow Media, which is grappling with C$2.16 billion in debt, to 'BB+' from 'BBB-'.