NEW YORK (AP) — Dex One Corp. and SuperMedia Inc., two Yellow Pages publishers, said Monday that they both filed for Chapter 11 bankruptcy protection as part of their plan to combine into one company.
The filings came after the companies failed to get approval for proposed changes to their credit agreements from all of their lenders. Pending court approval, the companies said they plan to put in place pre-packaged reorganization plans and use the process to complete their planned marriage originally announced in August within the next 45 to 60 days.
The operations of both companies are expected to continue without interruption during the restructuring. Neither of the companies need, nor intend to obtain, debtor-in-possession financing to fund their operations while they reorganize. Both said they still have substantial cash balances and continue to generate positive cash flow.
The companies also said that they both plan to work with their respective exchanges to keep their shares listed during their restructurings.
Under the terms of the deal announced in August, shareholders in the companies will exchange their shares for new shares in a new company, Dex Media. The companies said at the time that Dex Media should be able to cut annual costs by $150 million to $175 million by 2015, partly by job cuts. The two companies employed a combined 5,800 people as of August.
Both companies filed for Chapter 11 bankruptcy protection in 2009, as consumers shifted from using printed directories to doing online searches. They exited bankruptcy in 2010. Both sell listings in online directories as well, but have been unable to compensate fully for the drop in print revenue.
SuperMedia is based in Dallas. It was formerly known as Idearc Media, and was spun off from phone company Verizon Communications Inc. in 2006. Dex One, which is based in Cary, N.C., was known as R. H. Donnelley until it exited bankruptcy.
Also on Monday, Dex One said it posted a $35.4 million fourth-quarter loss, hurt by a double-digit drop in ad sales.
The loss amounted to 70 cents per share and compared with a profit of $5.5 million, or 11 cents per share, in the same quarter the year before. Revenue fell 14 percent to $301.3 million.
In morning trading Monday, Dex One shares fell 10 cents, or 4.7 percent, to $2.01, while SuperMedia shares lost 18 cents, or 4.1 percent, to $4.23.