Oh how the mighty fall. Just six years ago, Yell was a member of the FTSE 100 with shares at a high of 603p. Now it has been handed over to its creditors, suspending trading and making shares worth less than a faded copy of the Yellow Pages.
The company, having rebranded from ‘Yell’ to the utterly puzzling ‘Hibu’ in last year, caved under the creaking weight of its £2.3bn debt and was repossessed by lenders - who agreed to take control of the business. The debt-for-equity swap will save 12,000 employees at Hibu and give it a chance to soldier on, but will see shareholders left with nothing.
Rival listings companies are expected to gather around Hibu’s assets like hyenas around a fresh corpse, as the new owners try to recoup some of their losses. Its creditors include George Soros’ hedge fund, Deutsche Bank and private equity group Blackstone, who will also slow the repayments of its loans.
The deal slices £800m off the company’s debts, which it ran up during an ill-advised acquisition spree before the financial crash. In 2006, it bought the Spanish Yellow Pages for an eye-watering £2.3bn – a clear sign of its ignorance to the eradication of directories by Google and other search engines. This failure to wake up to the digital age cost the iconic listings company dearly.
Hibu posted group revenue of £1.35bn, which was down 16% on last year, thanks to the dwindling income from print directories.
Despite its earlier refusal to acknowledge ‘the age of the internet’, Hibu has recently invested heavily in online business services, a part of the business which now shows some promise. It’s digital services division managed to grow revenues by 34% to £174m, mostly down to Hibu Business, which helps business to create online stores and websites.
Hopefully, as the asset sell-off begins, Hibu will manage to hold on to its digital services arm but chances are the hyenas gathering around the company are no doubt eyeing up that particularly prime piece of flesh.