Around 400 of Hibu’s creditors, including Goldman Sachs, Royal Bank of Scotland and Deutsche Bank, are on the brink of appointing US restructuring firm Houlihan Lokey to advise on a debt-for-equity swap.
However, Hibu’s interest charges continue to take a bite out of any potential profits. Last year the company spent £160m on interest and chalked up a loss of £1.4bn as it wrote down the value of its overseas acquisitions.
Chief executive Mike Pocock and chairman Bob Wigley have attempted to turn the company around by repositioning it as a local search engine and marketplace, linking shoppers with the businesses nearest to them.
They have also tried to draw a line under Yell’s “dinosaur” status by rechristening the company as Hibu – a name which Mr Pocock has admitted is “just a word” with no real meaning.
Most of Hibu’s debt matures in 2014 but the swap is expected to wipe out between £500m and £1.5bn of that figure. Creditors will take three or four months to weigh up the debt-for-equity plan and a swap is likely to be completed in the first quarter of next year.
Theoretically they could opt to restructure the existing debt instead, but sources close to the company said this was unlikely.
“The whole point of this is to bite the bullet rather than delay this difficult situation any further,” a source said.
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