US Judge Bars Truvo Creditors From Going After European Assets

15th Jul 2010 22:10

By Patrick Fitzgerald Of DOW JONES DAILY BANKRUPTCY REVIEW A U.S. bankruptcy judge overseeing Truvo Group's restructuring issued a preliminary injunction barring would-be dissident creditors from scuttling the European directory publisher's reorganization bid. Judge Arthur J. Gonzalez signed off on a preliminary injunction barring creditors from trying to seize the company's European assets to repay their debts following a hearing Wednesday in U.S. Bankruptcy Court. Gonzalez said attempts by dissident bondholders to pursue their claims by forcing Truvo's European operations into insolvency proceeding overseas would cause "immediate and irreparable injury" to the directory publisher and throw a wrench in the company's effort to reorganize. The privately owned Truvo and its bankruptcy backers had argued that would-be dissident lenders and bondholders would destroy the company's best opportunity to restructure its business. Truvo USA and four other holding companies at the top of the Truvo Groups' corporate structure filed for Chapter 11 protection earlier this month in U.S. Bankruptcy Court in Manhattan after reaching a deal on a debt-for-equity swap with a majority of its senior lenders. Under the plan, Truvo's senior lenders, owed more than $1 billion, will swap their debt for ownership of the reorganized company. According to court papers, the senior lenders will recover somewhere between 63.8% and 84.1% of what they are owed. While senior lenders holding almost 80% of Truvo's debt support the plan, there are significant holdouts. Among the holdouts, according to court filings, are a number of structured finance vehicles as well as such banking giants as Deutsche Bank AG (DB, DBK.XE), Bank of America Corp. (BAC) and Barclays PLC (BCS, BARC.LN). Together they are owed about $296 million. Also, a number of bondholders, who are owed a total of more than $700 million and whose debt was guaranteed by the European operations, haven't signed off on the plan. The plan calls for bondholders--if they vote for the proposal--to divvy up EUR15 million and receive the right to buy shares in the reorganized company. That works out to a recovery of between 2.8 cents and 4.8 cents on the dollar. A group of junior payment-in-kind lenders, owed about $223 million, will also receive warrants in the new company if they vote to accept the plan. Their recovery works out to less than one cent on the dollar. Truvo, formerly called VNU World Directories, is a directories and advertising company owned by buyout firms Apax Partners and Cinven Group. The company, founded in 1967 and based in Belgium, was bought by Apax and Cinven for roughly EUR2.2 billion ($2.8 billion), including debt, in September 2004. It sells advertising through local search sites and produces white-page and yellow-page directories in several European countries. But the debt-laden company is 11 times leveraged and it struggled to service its debt as sales nosedived in recent years due to declining print use and slumping advertising. The company reported a net loss of more than $330 million last year. (Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection) -By Patrick Fitzgerald; Dow Jones Daily Bankruptcy Review; 202-862-3544; [email protected] (END) Dow Jones Newswires July 15, 2010 17:10 ET (21:10 GMT)