DBRS Rates Yellow Media Inc.’s $200 Million Subordinated Debentures Issue BBB, Stable Trend

DBRS has today assigned a rating of BBB to the $200 million convertible unsecured subordinated debentures (the Debentures) to be issued by Yellow Media Inc. (Yellow Media or the Company). The Debentures will be convertible, at the option of the holder, for trust units of Yellow Pages Income Fund at an exchange price of $8.00 per unit. Following the conversion to a corporation, the Debentures will be exchangeable for common shares of Yellow Media at the same exchange price of $8.00 per share. The trend is Stable.

The Debentures will be direct unsecured obligations of Yellow Media, will rank senior to the Company’s subordinated intercompany debt and will be subordinate to the senior indebtedness of the Company. Additionally, the Debentures will rank pari passu with the 5.5% exchangeable debentures, which Yellow Media plans to redeem. The Debentures will be fully and unconditionally guaranteed on a subordinate basis by Yellow Pages Income Fund, YPG Trust and YPG LP as to the payment of principal, interest and premiums, if any. This issue, done on a bought-deal basis, is scheduled to close on or about July 8, 2010.

DBRS expects Yellow Media to use the proceeds from this issuance for debt refinancing, including borrowings under its commercial paper program and to fund the redemption of its 5.5% exchangeable debentures, and for general corporate purposes.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Media and Entertainment, which can be found on our website under Methodologies.

This is a Corporate (Telecom/Media/Technology) rating.