China Development Bank contributes $50 million USD to a syndicated loan for the debt restructuring of the Yellow Pages Group

Project narrative

Circa 2010, China Development Bank (CDB) contributed $50 million USD to a syndicated loan for the Yellow Pages Group Project as part of Yellow Pages Group’s $2.2 billion AUD debt restructuring. Yellow Pages Group Limited is a New Zealand-incorporated and based directories business. In 2007, after a competitive process, Hong Kong-based Unitas Capital (formerly CCMP Capital Asia) and Canada's Ontario Teachers' Pension Plan paid $2.24 billion NZD to acquire Yellow Pages Group from Telecom Corporation of New Zealand Limited. The buyers used $1.5 billion NZD of senior debt to finance the deal, which was loaded onto Yellow Pages' balance sheet. Additionally, Yellow Pages had outstanding work capital and capital expenditure facilities each valued at $50 million NZD, a $315 million NZD subordinated debt facility, and a $228 million NZD 'payment in kind' facility. The global financial crisis and increased usage of the Internet had harmed the directories industry. By 2010, Yellow Pages had suffered serious losses and fell into debt distress. The lenders to the bank, especially the holder of $1.175 billion NZD in senior debt, sought to sell the business to minimize their losses once it fell their control, pending a breach of its financial covenants and ensuing event of default. In total, Yellow Pages' debt was dispersed among 36 lenders, including lead banker Bank of New Zealand (BNZ), Australia and New Zealand Banking Group Limited (ANZ), Westpac, Barclays Capital, ABN Amro, Deutsche Bank, the Accident Compensation Corporation (which sold its holding and thus lost its exposure), Credit Agricole Corporate and Investment Bank (formerly Calyon), Macquarie Group, Allied Irish Banks (AIB), the Royal Bank of Scotland (RBS), Sumitomo Mitsui Banking Corporation (SMBC), United Overseas Bank, Hastings Funds Management, and Export Development Canada (EDC), Barclays and Intermediate Capital Group, Goldman Sachs. In April 2010, Yellow Pages signed a standstill agreement to allow for time to restructure its capital. The banks put Yellow Pages Group up for sale in July 2010. In September 2010, the banks took Yellow Pages off the market and looked toward debt restructuring. In January 2011, the senior lenders of Yellow Pages Group had taken full control over the company. The lenders crystalized $1.05 billion NZD in losses as they restructured the company's capital, selling the trading businesses into a new corporate framework with new debt facilities, confirmed a new board, and wrote off $1.05 billion NZD in debt. After the debt restructuring, BNZ, Deutsche Bank, Goldman Sach, and Barclays were among the banks holding Yellow Pages debt. The old shareholders' interests were now worthless. Despite the debt write-off, by 2014, NZ Directories Holdings (the holding company of Yellow Pages Group) remained in debt distress, with $389 million NZD in debt due to be repaid in August 2014 and no realistic chance of NZ Directories Holdings refinancing the loans at their carrying value, with restructuring by the lenders (at this point still the owners of NZ Directories Holdings) that would see a new company, owned by existing buy shares in the trading subsidiaries NZ Directories IP and Yellow Pages Group, while NZ Directories Holdings would enter receivership or liquidation.