Dex One, SuperMedia file for Chapter 11

Posted Monday, Mar. 18, 2013  comments  Print Reprints
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Dex One Corp. and SuperMedia Inc., two money-losing phone book publishers, plan to merge by returning to bankruptcy, about three years after each exited court protection.

SuperMedia, based at Dallas/Fort Worth Airport, was formerly known as Idearc Media, and spun out of Verizon Communications in 2006. Dex One, based in Cary, N.C., was known as R. H. Donnelley until it exited bankruptcy.

The filings came after the companies failed to get approval for proposed changes to credit agreements from all of their lenders. Pending court approval, the companies said they plan to put in place pre-packaged reorganization plans and use the process to complete their planned marriage, originally announced in August, within the next 45 to 60 days.

The merger will save the companies as much as $175 million annually, Dex One's general counsel, Mark W. Hianik, said in an affidavit filed in U.S. Bankruptcy Court in Wilmington, Del.

"The merger will enable the combined company to benefit from improved operating scale, significant synergies and enhanced cash flow," Hianik said in the filing.

The operations of both companies are expected to continue without interruption during the restructuring. Neither company needs, nor intends to obtain, debtor-in-possession financing to fund their operations while they reorganize. Both said they still have substantial cash balances and continue to generate positive cash flow.

SuperMedia had net income of $314 million in the 12 months ended Sept. 30, after losing $967 million the previous two years, according to information compiled by Bloomberg. Dex One had income of $62 million in 2012 after losing $518 million in 2011.

The companies also said that they both plan to work with their respective exchanges to keep their shares listed during the restructuring.

Under terms of the deal announced in August, shareholders in the companies will exchange their shares for shares in a new company, Dex Media, to be based at DFW. The two companies employed a combined 5,800 people as of August, including 800 at DFW.

Both companies filed for Chapter 11 bankruptcy protection in 2009, as consumers shifted from using printed directories to doing online searches for telephone numbers. They exited bankruptcy in 2010. Both sell listings in online directories as well, but have been unable to compensate fully for the drop in print revenue.

Also on Monday, Dex One said it posted a $35.4 million fourth-quarter loss, hurt by a double-digit drop in ad sales. The loss amounted to 70 cents per share and compared with a profit of $5.5 million, or 11 cents per share, in the same quarter the year before. Revenue fell 14 percent to $301.3 million.

This article includes material from The Associated Press, Bloomberg News and Star-Telegram archives.

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