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YELLOW MEDIA INC. Message Board

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  • peristentone peristentone Feb 9, 2012 12:02 PM Flag

    Told you so...

    Why would they declare bankruptcy in the next quarter instead of waiting for 2013Q1 for the mandatory repayment of the credit line? Without an immediate maturity due they can slump along here.

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    • Immediate problem is their loan covenants - within two quarters, debt will exceed 3.5x EBITDA, and loans become immediately repayable.
      Beyond that, revenues and cashflow are declining so quickly that they will be burning cash. Cumulative debt only fell last quarter, from Q3/11, because they sold Lespac. EBITDA is falling by $15-20 m per quarter, and they have increased taxes and loan repayments. The suspension of preferred dividends is pretty telling of their cash situation.
      If preferreds will be worthless, then obviously so is common equity.