DBRS Downgrades Yellow Media’s Issuer and Security Ratings to D

DBRS has today downgraded Yellow Media Inc.’s (Yellow Media or the Company) Issuer Rating to
D from C (high). DBRS has also downgraded the Company’s Medium-Term Notes rating to D from C (high) and is discontinuing its recovery rating of RR4; the Company’s Exchangeable Subordinated Debentures rating to D from C (low) and is discontinuing its recovery rating of RR6; and the Company’s Cumulative Preferred Shares rating to D from Pfd-5 (low).

On July 23, 2012, DBRS noted that Yellow Media’s ratings were placed Under Review with Negative Implications pending the final approval of its proposed recapitalization. The recapitalisation was approved by debtholders and shareholders on September 6, 2012, and was intended to close by the end of September 2012, subject to a number of conditions, including the receipt of the Court’s final approval. On September 10, 2012, Yellow Media announced that the hearing for the final approval by the Québec Superior Court had been postponed and is set by the Court to begin on October 15, 2012.

On September 14, 2012, the Québec Superior Court granted the Company a safeguard order suspending its obligation to pay accrued and unpaid interest in respect of Yellow Media’s convertible debentures, including the October 1, 2012, interest payment or pay any principal or interest or any similar payment accruing on or after September 30, 2012, under its existing credit facilities and medium-term notes. The safeguard order is effective until ten days following the judgment of the Québec Superior Court on the final orders sought at the hearing for the final approval of its proposed recapitalization, subject to any further order of the Court.

Accordingly, Yellow Media did not pay its October 1, 2012, interest payment on its convertible debentures nor did the Company pay the $25 million principal repayment due October 1, 2012, under its existing credit facilities. As such, Yellow Media’s issuer and securities ratings have been downgraded to D in accordance with DBRS policy.

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

The applicable methodology is Rating the Newspaper and Magazine Publishing Industry (July 2012), which can be found on our website under Methodologies.