December 10, 2012 11:59 pm

Triton in control of European Directories

Triton, a private equity group that targets companies in northern Europe, has seized control of yellow pages group European Directories, ending a long debt restructuring.

Triton, which manages a €2.38bn buyout fund and has a taste for distressed investments, will inject €15m into the company, bringing its stake to 50.1 per cent, the rest of the shares being split among senior lenders, it said Monday. As part of the deal, debt is being reduced to €262m, or 2.8 times earnings before interest, tax, depreciation and amortisation, from €893m previously.

“Although the business continues to face a number of challenges which must be overcome, we are confident that there is a future for the business as a leading player in local search and lead generation in its respective markets,’’ Peder Prahl, a Triton director, said in the statement.

Triton’s injection is the final chapter of a two-year debt restructuring for the Amsterdam-based directories publisher.

European Directories was formed in 2005 after its owner Macquarie Capital bought Yellow Brick Road for €1.8bn from London-based private equity group 3i, and expanded it through add-on acquisitions in Scandinavia, the Netherlands and Poland.

In 2010, lenders took control of the company, which struggled to compete with online search engines, and tried to sell it. This year, Triton, whose largest offices are in Stockholm and Frankfurt, purchased 29 per cent of its debts on the secondary market with the aim of gaining control in a debt-to-equity swap.

This so-called “loan to control” strategy has lured many distressed investors in Europe, including US groups Oaktree and Apollo Global Management, as the region grapples with the sovereign debt crisis.

Private equity groups, predicting a flurry of defaults in over-leveraged buyouts done before the financial crisis, raised €6.7bn last year for turnrounds and distressed debt investments in Europe, almost double the amount raised the year before, according to research firm Preqin. They have raised another €4.4bn this year.

The directories business, which was the target of large leveraged buyouts before the credit crash, has provided several defaults and so-called special situations as its fortunes deteriorated rapidly.

Seat Pagine Gialle, the publisher of Italy’s yellow pages, which was bought by private equity groups Permira Advisers, CVC Capital Partners and Investitori Associati in a €5.65bn deal in 2003, had its debt restructured this year.

New York buyout group KKR has written down its investment in France’s PagesJaunes, in which it bought a majority stake jointly with Goldman Sachs in 2006. Yell Group in the UK has also struggled.

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