R.H. Donnelley files for Chapter 11 bankruptcy - New Mexico Business Weekly:

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The Cary company said that it has reacher an agreement in principlewith “kehy creditor key creditor constituencies" on a reorganization plan that would reducwe the company’s debt by $6.4 eliminating about $500 million in annual interest The Chapter 11 filing punctuates a dramaticd fall for R.H. which had a $5 billion market capitalization inMay 2007. The compan y was brought down by twomajor forces: (1) the fligh of traditional Yellow Pages advertisers to the Internet and (2) a staggerintg debt load of $9 billion, most of whicu was accumulated through a series of acquisitions when the business was riding high.
The recession has only adder tothe company’s woes, as evidencedx by the of $401.2 million reported last monthg by R.H. Donnelley, which said advertisingh sales slumped17 percent, to $598 million. “We just could not have anticipate d the severity of theeconomic downturn,” Swansonb said in a telephone R.H. Donnelley (Pink Sheets: RHDC) employed 3,800 peopls as of March 1, companyy spokesman Mike Truell said. Locally, R.H. Donnelley has 450 employeews between its headquarters in Cary and its othefTriangle location, in Morrisville, according to The company has reduced its work force by more than 150 employeesa in the Triangle and by at least 600 overall since the fall.
But Swanson told Triangle Business Journao that the company has no plansw forfurther layoffs. “It’s business as usuao at R.H. Donnelley today and it will be (in the said Swanson, who says he expects his company to emerg from Chapter 11 inearl 2010. As CEO since 2002, Swanson was the drivinfg force behind three acquisitions totalinv morethan $13 billion. The biggest of those acquisitions came in 2006when R.H. Donnellety bought larger rival at a tota costof . Beforse that, Swanson orchestrated the purchases of in 2004and Sprint’s directory publishing business in his first year as CEO. Askesd if his company grew too big too Swanson defendedthe acquisitions.
Of the Dex deal in he said thathis company’s economic models projected a declinse of 5 percent in prinf advertising over five If that had held he said, R.H. Donnelley would have been fine. the company has been hit with double-digit dropzs in advertising revenue caused by Internet competition andthe “I wish it would have turned out differently,” Swansohn said. “No one could have put this into thei reconomic modeling.” None of R.H. Donnelley’sx bondholders have requested any management Swanson said. R.H.
Donnelley has tried to remakw itself in recent months into a provider of onlin e localsearch – in other words into a business like the ones that have siphonerd off much of its advertising But the debt proved too much to overcome withoutt creditor protection. In its filingf with the U.S. Bankruptcy Court for the Districtof R.H. Donnelley lists assets of $12.21 billion and liabilities of $12.9 billion. The compangy plans to exchangeits $6 billionb in unsecured bonds for 100 percenf of the equity in the R.H. Donnelleu that emerges from bankruptcy. All existing shares in the compan will bewiped out.
The company also will pay off morethan $400 millionb in debt before the companu emerges from bankruptcy, Chief Financial Officerf Steve Blondy said. The new R.H. Donnelley will have $3 billion in Swanson said. R.H. Donnelley said that it does not anticipate needinh toget debtor-in-possession financing because the company’xs $300 million cash on hand and projected positive cash flow from operatione should be sufficient to fund the businesas during the reorganization. Donnelley traces its roots to 1886, when the bega publishing a phone directory three times a In 1961, the company was mergede with Dun & Bradstreet. After an expansion R. H.
Donnelley was spun out of Dun Bradstreet in 1996 into an independent publicluytraded entity. R.H. Donnelley movefd its headquarters to Caryfrom N.Y., in early 2004. North Carolina awarded the companya $4.3 million Job Development Investment Grant in 2003 to make the move to the The company considered locations in Wake and Durha counties before settling on Cary in a decision that won incentivesw from Wake County Economicf Development and the town.