YLO Closes Trader Corporation Sale

Yellow Media has announced:

the successful completion of the sale of Trader Corporation’s automotive segment to Funds advised by Apax Partners. The transaction, previously announced on March 25, 2011, was completed for a net purchase consideration of $708 million, net of expenses and estimated working capital, fees and other adjustments.

This divestiture will enable the Company to strengthen its capital structure and focus all of its efforts on YPG’s digital transformation and organic execution in its core business. The proceeds from the sale will be largely used to reduce indebtedness and for general corporate purposes.

I’ve been checking every day since the Trader Corp. debt issue closed on July 22! As noted on July 27, their 11Q2 financials will be released on August 4.

This is not the kind of thing I usually report on PrefBlog … but the YLO issues have been … somewhat volatile in recent months. YLO has four issues outstanding, the retractibles YLO.PR.A and YLO.PR.B; and the FixedResets YLO.PR.C and YLO.PR.D. All are tracked by HIMIPref™; all are relegated to the Scraps index on credit concerns.

The June edition of PrefLetter contained a short appendix on YLO; I won’t decide until I look at the financials, but I suspect that the August edition will have another.

4 Responses to “YLO Closes Trader Corporation Sale”

  1. newbiepref says:

    Hi Mr. Hymas
    Do you see YLO redeem the Pr.A issue in advance as this is the first debt that is due? After all, this should yield a better return than having the cash sitting idle in a bank account.

  2. jiHymas says:

    I wouldn’t think so – why redeem at $25 when you can buy on the market with a normal course issuer bid at $21.20?

    I believe that almost all of the cash will go into buy-backs – of common, preferred and debt – at highly discounted prices, which will help their balance sheet immensely.

    Not all of the cash will be spent on preferreds, of course, and any buying of preferreds they do will affect the prices … but consider: YLO.PR.B, YLO.PR.C and YLO.PR.D are all trading at just a little over one-half of par value. If they deployed all their cash into buy-backs at these prices, they would spend $700-million to buy back $1.4-billion face value of these things (more than are outstanding, but we’ll ignore that) and wham! Not only are their fixed charges reduced, but they’ve made a profit of $700-million which goes directly into shareholders’ equity!

  3. […] YLO closed the Trader Corp. deal yesterday, but it didn’t do them much good on the market as three of their four preferreds were down significantly on the day (bid/bid) – the exception was the short-term retractible, YLO.PR.A. […]

  4. […] As for the holdings in YLO preferreds – which were topped up during the month to maintain a weighting of about 3.5% in the face of declining price – what can I say? While I certainly agree that this is not a tip-top credit – which is why I’m limiting exposure to 3.5% – I cannot fathom why the preferreds are trading at only a little over half price – particularly since the sale of Trader Corporation to Apax closed on July 28. […]

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