Published June 23, 2009

Yellow Pages flagged in going concern alert

PwC points to $130m worth of bonds that firm is trying to refinance

By JOYCE HOOI

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(SINGAPORE) The iconic yellow book firm has had attention drawn to its own books by its independent auditor. Yellow Pages (Singapore) Ltd was flagged in a going concern notice by PricewaterhouseCoopers LLP (PwC) yesterday.

Judging a book: Yellow Pages will not pay a final dividend for FY2009 despite net profit rising 52 per cent

In its report, PwC drew attention to Yellow Pages' unsecured fixed rate bonds amounting to $130 million that will be maturing on Sept 30, 2009.

In its latest financial statement, the group said it was in the process of finalising the refinancing of the bonds, which would involve the use of cash on hand and a proposed rights-cum-warrants issue that is subject to shareholder approval at an extraordinary general meeting.

'If the additional financing is not obtained, this may result in a material uncertainty which may cast significant doubt about the company and the group's ability to continue as a going concern,' PwC stated in its emphasis of matter note.

Earlier this month, Yellow Pages had proposed the renounceable non-underwritten rights-cum-warrants issue of up to 395.16 million rights shares at $0.15 apiece, with up to 158.07 million free warrants, convertible at an exercise price of $0.175.

The rights issue is expected to raise up to $58.9 million that will go towards repaying the bonds, while the warrants could raise a further $27.7 million if fully exercised.

Having paid an interim dividend of one cent per ordinary share for the financial period ended Sept 30, 2008, the company had decided against a final dividend for FY2009, in view of the need to refinance the bonds, despite posting a 51.7 per cent increase in net profit to $15.2 million.

According to Yellow Pages' unaudited financial statements for the financial year ended March 31, 2009, the group had cash and cash equivalents amounting to about $52 million.

In 2007, the iconic firm made headlines with a high-profile boardroom brawl in which a major shareholder, Stanley Tan, had attempted to oust its then-chief executive officer, Goh Sik Ngee, and four independent directors with impressive credentials from big-name firms.

The debacle had ended with Mr Goh resigning and the four independent directors stepping down.

The company, once at its peak with its share price trading at slightly over $2 apiece in 2005, was sold by SingTel for $220 million to private equity firms CVC Asia Pacific and JP Morgan Partners Asia in 2003.

It closed 1.5 cents lower at 40.5 cents in trading yesterday.