Dex Media makes pre-packaged Chapter 11 filing; lenders approve plan

By Caroline Salls

Pittsburgh, May 17 – Dex Media, Inc. made a pre-packaged Chapter 11 bankruptcy filing Monday in the U.S. Bankruptcy Court for the District of Delaware, calling the move “a major step toward completing its financial restructuring, according to a news release.

The company said it expects to receive court approval to pay employee wages, to offer benefits and to continue to pay trade creditors and suppliers in the ordinary course of business.

The filing follows the solicitation of votes on the pre-packaged plan of reorganization from senior secured lenders. Dex said the solicitation process resulted in more than 96% of the lenders voting in favor of the plan.

The restructuring is expected to be completed during the third quarter.

“Today’s developments are important milestones in our continued progress toward establishing a capital structure that will support our new strategy and enable our growth,” president and chief executive officer Joe Walsh said in the release.

“We have made great strides in improving our print and digital product offerings and are seeing a positive response from the market.

“Our plan meets a critical need for our future – a capital structure that will significantly reduce our indebtedness and provide us with the financial flexibility and strength we need to achieve our growth objectives and remain a strong partner to the local businesses we are committed to supporting across the country.”

The company said it did not obtain debtor-in-possession financing, as it maintains substantial cash balances and continues to generate positive cash flow to fund its ongoing operations. Dex did request court approval to use the cash collateral of its pre-bankruptcy secured parties to fund its operations while in bankruptcy.

Plan terms

Under the plan, Dex Media’s senior secured lenders will exchange their $2.12 billion of claims for a new $600 million first-lien term loan; 100% of the equity of the reorganized Dex Media, subject to potential dilution from a management incentive plan; and a cash distribution upon emergence.

Unsecured noteholders will receive a $5 million cash payment and warrants to purchase up to 10% of the post-reorganized equity.

All allowed trade vendor claims will be paid in full.

Claims related to the purchase and sale of debt and securities, as well as existing equity interests in Dex Media, will be cancelled without any distribution.

Debt details

According to court documents, Dex had $1,268,000,000 in total assets and $2.65 billion of total debt as of Dec. 31.

The company’s largest unsecured creditors are:

• BNY Mellon Corporate Trust and the Bank of New York Mellon Trust Co., NA of Pittsburgh, with a $270.08 million unsecured debt claim;

• Google Inc. of Mountain View, Calif., with an $11.81 million trade debt claim;

• RR Donnelley & Sons Co. of New York, with a $3.94 million trade debt claim;

• Microsoft Online, Inc. of Reno, Nev., with a $2.7 million trade debt claim;

• Product Development Corp. of Monterey, Calif., with a $1.94 million trade debt claim;

• Boostability of Lehi, Utah, with a $1.51 million trade debt claim;

• American Express TRS Co. Inc. of Fort Lauderdale, Fla., with a $1.3 million trade debt claim; and

• Accenture LLP of New York, with a $1.25 million trade debt claim.

Dex Media’s legal adviser in connection with the restructuring is Kirkland & Ellis LLP. Alvarez & Marsal North America, LLC serves as its restructuring adviser, and Andrew Hede from Alvarez & Marsal serves as chief restructuring officer.

Dex is a Dallas-based full-service media company. The Chapter 11 case number is 16-11200.

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