Dex One Corp. (NYSE: DEXO) and SuperMedia Inc. (Nasdaq: SPMD) have filed for Chapter 11 bankruptcy protection with prepackaged reorganization plans to execute a merger.
The small-business advertising companies agreed to combine in August.
Dex One, headquartered in Cary, N.C., offers online and print advertising services. SuperMedia, based in New York, provides online, print, direct mail and packaging services.
The companies filed for bankruptcy protection on March 17 in the U.S. Bankruptcy Court for the District of Delaware in Wilmington. If the prepackaged plan is confirmed, the company will exit after the merger closes, which it expects to happen within the next 45 to 60 days. The companies don’t intend to delist during the bankruptcy process, but the New York Stock Exchange notified Dex One on Feb. 27 that it was commencing a proceeding to delist the company because it failed to maintain the proper global market capitalization. Dex notified the exchange that it plans to appeal the decision, according to filings with the U.S. Securities and Exchange Commission.
Dex and SuperMedia don’t need any debtor-in-possession financing, and have filed court motions to continue business, including to pay employees and utilities.
The companies did not receive the necessary lender approvals before they filed for bankruptcy protection, according to court documents. Agreements with lenders will be amended through the reorganization plans.
In court papers Dex One said it had sufferent from declining advertising revenues because consumers use print directory products less frequently. Print advertising revenue decline has also affected the media industry, causing the Journal Register Co., Reader's Digest and other publishers to seek bankruptcy protection.
Houlihan Lokey Capital Inc. is Dex One’s financial adviser; while Kirland & Ellis LLP is legal counsel. Morgan Stanley & Co. LLC is acting as SuperMedia’s financial adviser; and Fulbright & Jaworski LLP and Cleary Gottlieb Steen & Hamilton LLP are providing legal advice. Chilmark Parnters is financial adviser to SuperMedia’s board of directors.
Pictured: Alfred Mockett, Dex One CEO