YPG Issues 10-year Convertible Notes at 6.25%

Yellow Pages Income Fund has announced:

that its subsidiary, Yellow Media Inc. (the “Issuer”), will be issuing $200 million aggregate principal amount of 6.25% convertible unsecured subordinated debentures (the “Convertible Debentures”) on a bought deal basis. The Convertible Debentures pay interest semi-annually on April 1 and October 1 of each year commencing October 1, 2010. The Convertible Debentures have a maturity date of October 1, 2017 and will be convertible, at the option of the holder, for trust units (“Units”) of the Fund at an exchange price of $8.00 per Unit.

The Issuer has also granted the underwriters the option to purchase up to $30 million principal amount of additional Convertible Debentures at a price of $1,000 per Convertible Debenture (plus accrued interest from the initial closing of the offering to the closing of the over-allotment option) to cover over-allotments, exercisable in whole or in part anytime up to 30 days following closing of the offering.

Net proceeds resulting from the sale of the Convertible Debentures of the Issuer shall be used by the Issuer to repay indebtedness, including under the Issuer’s commercial paper program and to fund the redemption of the Issuer’s outstanding 5.50% Exchangeable Unsecured Subordinated Debentures, and for general corporate purposes.

Pursuant to the Fund’s previously announced plan of arrangement under the Canada Business Corporations Act, the Fund’s income trust structure will be converted into a corporate structure. As a result, the Convertible Debentures will, without the requirement for the consent of any holders of Convertible Debentures, become debentures of the successor public corporation on the effective date of the arrangement having the same terms as the Convertible Debentures and will become convertible into common shares of the successor public corporation.

The Convertible Debentures will be offered for sale to the public in each of the provinces and territories of Canada pursuant to a short form prospectus of the Issuer to be filed with Canadian securities regulatory authorities in all Canadian jurisdictions.

The underwriting syndicate is led by RBC Capital Markets and TD Securities and Scotia Capital, acting as joint book-runners.

The offering is scheduled to close on or about July 8, 2010, subject to certain conditions, including conditions to be set forth in the underwriting agreement.

Yellow Media (formerly YPG Holdings) has four issues of preferreds outstanding:

  • YPG.PR.A, OpRet, closed 6/14 at 24.60-73 to yeild 4.87-63%
  • YPG.PR.B, OpRet, 20.56-72 to yield 8.40-27%
  • YPG.PR.C, FixedReset, 24.10-30, 7.16-10%
  • YPG.PR.D, FixedReset, 24.20-60, 7.24-11%

Update: DBRS rates them at BBB.

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