Idearc, Paulson standby equity purchase arrangement approved

By Caroline Salls

Pittsburgh, Nov. 18 - Idearc Inc. received court approval to enter into a standby equity purchase arrangement with funds managed by Paulson & Co. Inc., according to a Wednesday filing with the U.S. Bankruptcy Court for the Northern District of Texas.

Under the arrangement, each holder of class 3 and class 4 claims under Idearc's proposed plan of reorganization will have the right to elect to receive cash in lieu of shares of new Idearc common stock.

The company said the cash to fund the elections by claimholders will be provided by Paulson's purchase of the number of shares of new common stock that otherwise would have been distributed to electing claim holders from reorganized Idearc.

Also under the proposed standby purchase agreement, the amount of new common stock that Paulson can acquire is limited so that Paulson will not beneficially own more than 45% of the outstanding new Idearc common stock.

As part of the proposed arrangement, Idearc said it would agree with Paulson on corporate governance measures, including Paulson being granted the right to nominate one director to serve on Idearc's board of directors.

Idearc, a Dallas-based provider of yellow and white page directories and related advertising products, filed for bankruptcy on March 31, 2009. Its Chapter 11 case number is 09-31828.

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