Debt sinks Hibu as rescue plans wipes out investors

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IT WAS once the first port of call for tradesmen’s phone numbers, shooting to fame thanks to the JR Hartley fly fishing TV adverts in the 1980s.

Now Yellow Pages publisher Hibu is poised to fall into the arms of its lenders after finally being crushed under the weight of its £2.3 billion debt mountain.

Under a restructuring plan unveiled yesterday, shareholders will see their investments wiped out as Hibu’s creditors, which include Wall Street hedge funds and banks, carry out a debt-for-equity swap that will write off £800 million of its borrowings.

Once part of BT, Yellow Pages launched its own internet services in the 1990s before being renamed Yell in 2000 and sold to a US private equity firm a year later for £2.1bn.

In 2003 it was floated on the London Stock Exchange where it became, for a while, a FTSE 100 stock with a market value of £5bn at its height. The firm, which changed its name to Hibu last year, built up its debts by buying directory businesses in Latin America, Spain and the United States.

Panmure Gordon analyst Alex DeGroote said: “It was a good company with a bad capital structure. Then it became a bad company with a very bad capital structure.

“Now, the capital structure has been partly repaired.”

In a letter to shareholders, Hibu chairman Bob Wigley said that the deal would safeguard the company’s 12,000 staff.

But DeGroote expects the new board to cut jobs.

“I think it will be carnage,” he said. “They’ll take lots of heads out. I think the business will be pared right back and the focus will be on generating as much cash as possible.”

Hibu’s shares had traded as high as 604.9p in 2007 but closed at 0.17p on Wednesday before the stock was suspended.