S&P downgrades directory publisher due to subpar buyback

Standard & Poor's downgraded US directory publisher SuperMedia yesterday due to the company's recently approved amendment to allow subpar repurchases and a subsequent tender offer of its term debt of up to $185 million for 90 days from the effective date of the amendment at a price between 70% and 77% of par.

The company had $2.5 billion of debt outstanding as of 30 September 2010, according to Standard & Poor's.

Standard & Poor's also warns of significant risks of decline in the print directory sector, as well as increased competition as small business advertising spreads across an increasing range of media.

The pressures faced by the directory sector is reflected in the Creditflux default index, with Local Insight, Thompson publishing, and Truvo all filing for bankruptcy in 2010, with a combined debt total of over $2 billion.