Yell Group appeared to secure its finances for the next year yesterday after the directories publisher tapped investors for £660 million, an amount much higher than had been expected. The group has been in talks with its banks since June over restructuring its debt, due to protracted negotiations with more than 300 lenders over the process.

The fully underwritten placing was expected to raise at least £500 million, but the higher amount will enable the publisher to benefit from lower interest payments. Yell said that it would issue 1.6 million shares at 42p, a 12.5 per cent discount to Monday’s closing price. The capital-raising will be split between a firm placing and a one-for-one placing and open offer.

Alex de Groote, an analyst at Panmure, said that the placing terms were better than expected. A placing is less onerous than a rights issue. After months in the doldrums, he said that the company’s share price had a “clear-cut path to value”.

John Davis, Yell’s chief financial officer, said: “We got a very good debt deal. It’s described as an extension, but it’s a new facility.”

He said that the placing would buy the company time as it reduced its debt over four years using cash generated by the business. Mr Davis expected, by March 2013, to have reduced the company’s leverage to about three times earnings before interest, taxation, depreciation and amortisation, compared with the present rating of five times.

He pointed to Yell’s free-cashflow performance in the first half of the year, when it generated almost £250 million despite the downturn.

Lorna Tilbian, an analyst with Numis Securities, said that Yell had secured the extension to its debt maturities, and headroom of between 20 per cent and 30 per cent on covenants, at reasonable terms.

Yell paid £85 million to restructure its debt and place the shares.

The Reading-based company also released first-half results showing a 67 per cent fall in pre-tax profits for the six months to September 30 to £38.7 million, as revenues fell 3.9 per cent to £982.8 million.

Revenues in Britain were down almost 13 per cent to £305.3 million, while profits fell to £121.2 million from £136.1 million, after revenues from printed directories declined by almost 20 per cent to £206.6 million following a fall of almost 15 per cent in the number of advertisers.

Yell shares closed 1¼p up, or 2.8 per cent, at 46¼p.

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