Idearc details terms of plan debt, financial projections for lenders

By Caroline Salls

Pittsburgh, Sept. 15 - Idearc, Inc. told its lenders on Tuesday that it expects to have a $2.75 billion debt level under its revised plan of reorganization, according to an 8-K filed with the Securities and Exchange Commission.

The company said its debt will have a term of six years and will bear cash interest at Libor plus 800 basis points, with a 300 bps floor.

If the fixed-charge coverage ratio is less than 1.25 times, the interest rate will be Libor plus 550 bps, plus 2.5% paid in-kind, at the company's option.

The minimum all-in rate will be 11%, according to the lender presentation.

Also under its revised plan, Idearc said it would distribute about $600 million of excess cash to lenders.

In addition, secured lenders would receive 95% of the new common equity in the reorganized company.

According to the presentation, the company's financial projections are based on a more rapidly improving U.S. economy beginning in 2010, the assumption that operating initiatives will more significantly impact both print and internet revenues beginning in 2010, a continued but moderating decline in print revenue and accelerated timing of cost-cutting initiatives.

Idearc said it expects to have EBITDA of $805 million for 2009, $522 million for 2010, $417 million for 2011, $413 million for 2012 and $414 million for 2013.

Meanwhile, the estimated total amortized revenue is $2.538 billion for 2009, $2.118 billion for 2010, $1.886 billion for 2011, $1.795 billion for 2012 and $1.765 billion for 2013.

Idearc, a Dallas-based provider of yellow and white page directories and related advertising products, filed for bankruptcy on March 31 in the U.S. Bankruptcy Court for the Northern District of Texas. Its Chapter 11 case number is 09-31828.

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