Yell renegotiates covenant terms and shares rise

Source: Reuters

Date :07/10/2008 10:13:34

Directories firm Yell has successfully renegotiated its covenant terms with lenders to give 20 percent headroom above forecasts, it said on Tuesday, sending its shares soaring.

Yell said in a statement the interest rate would rise by 1 percent and a one-off amendment fee of 0.5 percent would be paid to consenting lenders.

It said HSBC, as agent for the lenders, had confirmed that significantly more than the required acceptance level had been achieved.

The news sent shares in the group up an initial 13 percent to 106.25 pence before they eased to 95 pence, up 1.3 percent at 8:37 a.m.

Analysts welcomed the news and said the charges were in line with expectations.

"We estimate that the consensus downgrade to March 2010 numbers will be around 7 percent given the increased financing costs of 100bp," UBS said in a note to clients.

"There will also be around a 20 million pound one off re-negotiation fee. These charges are in line with prior market expectations. The news is likely to cause the shares to squeeze today as concerns over the covenants drop away."

Analysts at Kaupthing said the rate did not appear high in the current climate and said it should come as a relief to equity holders.

(Reporting by Kate Holton; editing by Sue Thomas)

LONDON (Reuters)