Idearc in Voluntary Chapter 11

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Long rumored and anticipated, it’s official today. Here’s the press release:

Idearc Inc. announced that the Company and its domestic subsidiaries today filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division. Idearc also announced that it has reached an agreement in principle with the agent bank and a steering group of its secured lenders on certain critical elements of a plan of reorganization. The Company expects to be able to file a plan of reorganization in approximately 30 days, and if implemented as proposed, this plan will enable Idearc to significantly reduce its outstanding debt to a more suitable level upon emergence from the legal proceedings.

Pursuant to the proposed plan, Idearc does not need nor intend to obtain debtor-in-possession (DIP) financing during the reorganization, as the Company maintains substantial cash balances and continues to generate positive cash flow, and has reached an agreement on use of cash collateral.

Idearc’s largest shareholder previously opposed the plan.

The debt burden that Idearc and RHD, which may be next in line, are saddled with obscures the postive cash flow and other assets that these publishers continue to have.

4 Responses to “Idearc in Voluntary Chapter 11”

  1. earlpearl Says:

    You’da thought they would have been willing to discount ads every time they called on me….and every time I said no.

    too bad.

  2. Wm McGill Says:

    Idearc’s debt was foisted upon it by Verizon. Part of the conditions for the spinoff in 2006 was that Idearc would have to take on a quarter of Verizon’s debt, $9.4 billion, although Verizon Directory Services, as it was then called, only brought in about 7% of the corporation’s revenue. Why Idearc thought it could handle that much debt is beyond me; revenues were already declining.

  3. Greg Sterling Says:

    It’s not clear how much choice idearc had in the matter. In the wake of the recession it looks very foolish but at the time I’m sure there were growth projections that made it look less daunting.

  4. Joe Mescher Says:

    Like the newspaper industry, this is a profitable business (through print and online sales … although the core business has rapidly deteriorated).

    What I hope people realize is that the move toward digital is only half the equation.

    DEBT – that dirty word – is the other half.

    Watching all these businesses tumble has me keeping a close watch on my own family finances.

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