Dex Media Inc.is moving toward a prepackaged bankruptcy.
The Yellow Pages publisher said May 2 that it struck a restructuringsupport agreement with creditors holding 66% of its senior secured credit facilitiesand over 65% of its senior subordinated notes. The agreement calls for a significantreduction of the company's current $2.42 billion in debt and simplifies its futurecapital structure.
The company and its creditors intend to implement the restructuringthrough a prepackaged plan of reorganization. Under the plan, Dex Media's seniorsecured lenders will exchange their current $2.12 billion of claims for a new $600million new first-lien term loan, while unsecured noteholders will receive a $5million cash payment and warrants to purchase up to 10% of the post-reorganizedequity.
All allowed trade vendor claims will be paid in full and employeesare expected to receive their full salary and benefits through the process.
"We are very pleased to have reached this important milestone,which will significantly deleverage our balance sheet, simplify our capital structureand unlock even more liquidity to implement our strategic growth plan," DexMedia President and CEO Joe Walsh said in a news release.
As of May 2, the company has begun soliciting votes for the planamong its senior secured lenders and senior subordinated noteholders. Once the solicitationprocess is complete and the company has received sufficient votes to confirm theplan, it expects to file voluntary Chapter 11 bankruptcy cases in the U.S. BankruptcyCourt for the District of Delaware. Dex Media intends to complete its restructuringduring the third quarter.