Yellow Pages Publisher Bankrupt

Another one bites the dust.

R.H. Donnelley files for bankruptcy
Big buyouts and shrinking ad revenue sinks Yellow Pages publisher

NEW YORK (MarketWatch) -- R.H. Donnelley Corp., the country's third largest print and online Yellow Pages publisher, said Friday it has filed for bankruptcy after years of growth through leveraged buyouts.

"Our growth-through-acquisition strategy never anticipated the cataclysmic collapse of the U.S. economy and the local advertising market," said David Swanson, chairman and chief executive. R.H. Donnelley said it has more than $300 million of cash on hand which, combined with projected positive cash flow, will be sufficient to fund operations during the restructuring.

Shares of Cary, N.C.-based R.H. Donnelley closed Thursday at 14 cents a share, off by 6.7%. The stock has had a tragic run, peaking at around $78 in 2007 before plunging on signs the economy was beginning to cool off.

R.H. Donnelley said it has already reached an agreement in principle with key creditors to reduce its debt by around $6.4 billion, eliminate roughly $500 million in annual interest expense and extend the company's bank maturities out to 2014.

At the end of 2008, R.H. Donnelley had more than $12 billion in total liabilities.

Since 2000, R.H. Donnelley has rung up more than $12 billion in acquisitions, including its $9 billion buyout of Dex Media, which included about $5 billion in debt. The company also purchased Sprint Directory Publishing and certain businesses of SBC Communication Inc.

Last year, the company swung to a $2.3 billion loss from a profit of $46.9 million, primarily due to non-recurring items. Total revenue came in at about $2.6 billion.

R.H. Donnelley has more than 4,400 employees and distributes its directories in nearly 30 states, serving more than 600,000 local and national advertisers.

Christopher Hinton is a reporter for MarketWatch based in New York.