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

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The Cary company said that it has reachefd an agreement in principlewith “key creditor key creditor constituencies" on a reorganization plan that woulxd reduce the company’s debt by $6.4 billion, eliminatiny about $500 million in annual interest payments. The Chapter 11 filinbg punctuates a dramatic fallfor R.H. which had a $5 billionn market capitalization inMay 2007. The company was broughyt down by twomajor forces: (1) the flighgt of traditional Yellow Pages advertiserse to the Internet and (2) a staggering debt load of $9 most of which was accumulated through a series of acquisitions when the businesx was riding high.
The recession has only added tothe company’s as evidenced by the of $401.2 millio reported last month by R.H. Donnelley, which said advertisint sales slumped17 percent, to $598 “We just could not have anticipated the severitty of the economic downturn,” Swanson said in a telephonse interview. R.H. Donnelley (Pink Sheets: RHDC) employed 3,80 people as of March 1, company spokesman Mike Truell said. Locally, R.H. Donnelley has 450 employeesd between its headquarters in Cary and its otheerTriangle location, in Morrisville, according to The company has reduced its work force by more than 150 employeeas in the Triangle and by at leas t 600 overall since the fall.
But Swansom told Triangle Business Journal that the company has no plands forfurther layoffs. “It’s business as usual at R.H. Donnelley todaty and it will be (in the said Swanson, who says he expectd his company to emerge from Chapter 11 inearlyh 2010. As CEO since 2002, Swanson was the driving force behind threes acquisitions totaling morethan $13 billion. The biggest of those acquisitions came in 2006when R.H. Donnelley bought largerr rival at a total costof . Before Swanson orchestrated the purchases of in 2004and Sprint’ s directory publishing business in 2002, his first year as CEO. Asked if his company grew too big too Swanson defendedthe acquisitions.
Of the Dex deal in he said thathis company’s economic modelse projected a decline of 5 percent in prinyt advertising over five years. If that had held he said, R.H. Donnelley would have been fine. the company has been hit with double-digit dropds in advertising revenue caused by Internef competition andthe “I wish it would have turned out differently,” Swanson said. “No one could have put this into theieconomic modeling.” None of R.H. Donnelley’sa bondholders have requested anymanagement changes, Swanson R.H.
Donnelley has tried to remake itself in recen t months into a provider of onlinee localsearch – in other words into a business like the ones that have siphonefd off much of its advertisinf base. But the debt proved too much to overcome without creditor In its filing withthe U.S. Bankruptcu Court for the Districtof Delaware, R.H. Donnelley list s assets of $12.1 billion and liabilities of $12.9 The company plans to exchangeits $6 billion in unsecured bonds for 100 percent of the equity in the R.H. Donnelleuy that emerges from bankruptcy. All existinh shares in the company will bewiped out.
The company also will pay off morethan $400 million in debt befor the company emerges from bankruptcy, Chief Financial Officer Stevs Blondy said. The new R.H. Donnelley will have $3 billion in debt, Swanson said. R.H. Donnelley said that it does not anticipats needing toget debtor-in-possession financing because the company’s $300 milliohn cash on hand and projected positive cash flow from operationxs should be sufficient to fund the business during the Donnelley traces its roots to 1886, when the bega publishing a phone directoryh three times a year. In 1961, the compant was merged with Dun & Bradstreet. After an expansiob spurt, R. H.
Donnelley was spun out of Dun & Bradstreert in 1996 into an independent publiclyhtraded entity. R.H. Donnelley moved its headquarters to Caryfrom N.Y., in early 2004. North Carolinaq awarded the companya $4.3 million Job Developmenf Investment Grant in 2003 to make the move to the The company considered locations in Wake and Durham counties beforwe settling on Cary in a decision that won incentives from Wake Countgy Economic Development and the town.