BT sells Yell to cut debt

May 26, 2001
Web posted at: 1045 GMT

LONDON (CNN) -- British Telecom agreed on Saturday to sell its Yell yellow pages business to a consortium of private equity firms for $3 billion.

The buyers, Apax Partners and Hicks Muse Tate & Furst, will pay 2.04 billion pounds in cash and 100 million pounds in loan notes.

The price is about a quarter less than BT, Britain's second-largest phone company, had expected for the unit. The consortium resubmitted its bid after British regulators capped advertising rates Yell can charge customers.

BT (BT-A) , which earlier this month launched a record £5.9 billion rights issue to help slash a £28-billion debt mountain, had been hoping to raise around £2.75 billion from the sale of Yell. The company plans to reduce its debt by about £10 billion this year.

Chief Executive Peter Bonfield said: "This transaction... shows further good progress in the implementation of BT's restructuring."

The debt-laden company has wavered for months about the future of Yell. The company has considered various options for the unit, including demerging the business and a partial stock market floatation.

Yell consists of several international-directory and classified-ad businesses in printed and online media. In the year ended March 31, 2001, Yell had profits before tax of 163 million pounds and sales of 774 million pounds.

BT also plans to sell off its property and is considering the sale of its stake in business services unit, Concert, to joint venture partner AT&T (T: Research, Estimates) of the U.S.

UK-based Apax and Hicks of the U.S., which beat off competition from rival private equity partnership of Kohlberg Kravis Roberts and Texas Pacific, are buying the business through a 50:50 joint venture.

The deal, one of the largest private equity transactions in Britain, is being financed by debt of 1.45 billion pounds being underwritten by Merrill Lynch (MER: Research, Estimates) and CIBC. Merrill also acted as financial advisor to the private equity group, Reuters said.

British Telecom
BT, AT&T in talks to merge business units - May 14, 2001
BT's Yell.com sale in doubt - May 12, 2001
British Telecom to overhaul business to slash debt - May 10, 2001

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