Local advertising business Dex Media Inc. (Nasdaq: DXM), which emerged from bankruptcy in 2013, is going through an organizational restructuring process.

Texas-based Dex provides local marketing services to more than 490,000 businesses in the U.S. The company makes print yellow-page directories in connection with phone-service providers, such as Verizon Communications Inc. (NYSE: VZ), CenturyLink Inc. (NYSE: CTL), FairPoint Communications Inc. (Nasdaq: FRP) and Frontier Communications Corp. (Nasdaq:FTR). Dex also provides local ad services to businesses through online local search engines, mobile search, and other advertising methods.

The company doesn't have the cash to repay debt scheduled to mature in December 2016 and January 2017. "Because the company lacks the cash flow from operations to fully pay the senior secured credit facilities and senior subordinated notes at maturity, the company will have to seek a restructuring, amendment or refinancing of its debt," Dex says in its latest annual filing with the U.S. Securities and Exchange Commission on March 16.

Dex amended its credit agreement in March. The new amendment requires the company solicit offers to repurchase and retire debt. Dex is allowed to use up to $6.5 million to repurchase bank debt at between 82 percent and 86 percent of its face value, according to a March 30 SEC filing.

Auditor Ernst & Young suggested the company hadn't maintained effective internal control over financial reporting as of Dec. 31, in a separate report also filed with the SEC. Dex management says that it will remediate any weakness by desining and implementing computing controls, review controls and other measures for 2015.

Dex plans to spend between $70 million and $100 million on an organizational restructuring program announced in December. The company says the plan should help it to launch virtual sales offices to replace field sales offices. Dex also plans to automate the sales process, integrate systems and reduce its workforce.

The 3,500-hundred person company announced plans in December to lay off 1,000 of its employees. Though the yellow-page division of its company remains important, Dex is heading in a more digital direction. "Our transformation is taking us to be a much more digitally-centric company," says Cliff Wilson, Dex vice president.

As part of the restructuring plan, Dex appointed Joseph Walsh as CEO and Paul Rouse as CFO. Walsh worked at Yellowbook Inc. from 1987 until 2011, and then worked at investment group Walsh Partners. Rouse also worked at Yellowbook between 1987 and 2012. Those staffing changes cost Dex about $10 million in severance payments to outgoing executives. 

The company was formed when small-business advertisers Dex One Corp. and SuperMedia Inc. decided to merge in 2012. To complete that deal and restructure debt, both companies filed pre-packaged Chapter 11 bankruptcy cases. Eventually, their reorganization plans were confirmed. The merger closed April 30, 2013, and Dex Media emerged from bankruptcy.

That wasn't the business' first round in bankruptcy -- Before the Dex-SuperMedia merger, Dex One and SuperMedia were both successor companies to 2010 and 2009 bankruptcy exits, respectively. 

For the previous edition of Turnaround Tuesday, see No Soup for You? Soupman Struggles Due to Working Capital Deficiency.

For more information on struggling companies, check out Mergers & Acquisitions Distressed Company Watch List

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