Idearc Bankruptcy Filing Signals Fresh Start for Company
April 1, 2009 | Contributed by: Neg Norton
In a major step to address debt structuring challenges and begin its process of transformation, Idearc voluntarily filed for Chapter 11 this week.
In its March 31 press release, the company announced that its reorganization “plan will enable Idearc to significantly reduce its outstanding debt to a more suitable level upon emergence from the legal proceedings.” Idearc also said it will operate business as usual throughout its restructuring process.
While “bankruptcy” can seem like an alarming word – and it’s true we’ve seen some Yellow Pages companies post mixed numbers in recent quarters – most of us believe that Idearc will be stronger in the long term for this action. That’s because Idearc’s bankruptcy filing is more of a reflection of its capital structure, and less about the effectiveness of its products and services. There will always be demand for services that connect consumers with businesses.
In fact, other Yellow Pages companies are posting positive financial results and many that are not publicly traded are telling us that there is still very strong demand out there.
When Idearc completes its reorganization, I think it will be well positioned to achieve strong financial results. The company has a new strategy in place and, combined with a more suitable capital structure, should be around for a long time to come.