Mon Mar 18, 2013 4:38am EDT
March 18 (Reuters) - Directories publishers Dex One Corp and SuperMedia Inc have filed for bankruptcy after failing to win the full support of senior secured lenders for a change to a credit agreement that was needed to complete their planned merger.
Dex One, formerly known as R.H. Donnelley Corp, and SuperMedia agreed last year to combine their businesses, with Dex One shareholders expected to own about 60 percent and SuperMedia shareholders the rest of the combined company.
As part of the proposed deal, Dex One and SuperMedia agreed with a committee of senior lenders to amend their credit agreements to extend the maturity dates of the companies' senior secured debt up to 26 months until Dec. 31, 2016.
The credit amendment needed to be approved by 100 percent of senior lenders for the companies to go ahead with the merger.
"While Dex One engaged extensively with its key stakeholders, the company was unable to obtain unanimous consent despite the broad and overwhelming lender support for the amendments and the merger," Dex One said in the filing.
Of the 400 senior secured lender votes received, 398 were cast in favor of the amendment plan, according to the filing.
Through a so-called prepackaged chapter 11 process, the companies hope to sideline the holdout creditors and win bankruptcy court approval for the credit amendment.
In a prepackaged bankruptcy, management negotiates with major creditors the general terms of a bankruptcy plan prior to the chapter 11 filing.
Subject to court approval of the plans, the companies expect the merger to be completed in 45 to 60 days, SuperMedia said.
"A substantial majority of our lenders and stockholders have pledged their support for this transaction and we remain committed to closing it in the first half of this year," Peter McDonald, CEO of SuperMedia, said in a statement.
Dex One has assets and liabilities both in the range of about $2.8 billion, while SuperMedia has total assets of $1.4 billion and total debt of $1.9 billion, according to the filing.
In 2010, R.H. Donnelley Corp emerged out of chapter 11 as Dex One Corp, after filing for bankruptcy protection in 2009 owing to declining demand for print directories.
The two firms hope their merger will allow them to better compete in the market with reduced costs, as well as enhanced cash flow and liquidity.
The case is Dex One Corp, Case No. 13-10533, and SuperMedia Inc, Case No. 13-10545, U.S. Bankruptcy Court, District of Delaware.
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