Debt-hit Yell sounds profit alarm as refinancing bites

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The firm unveiled plans to "comprehensively refinance" the business as it buckles under the weight of £3.8 billion of debt.

It also said profits will be down 20% in the first quarter of the year and 30% in the second quarter as advertising revenues fall.

The shares slumped 3p to 27¾p to value it at £218 million.

Yell was spun off from BT in 2001 but has racked up mammoth debts through disastrous acquisitions abroad, including the €3.1 billion (£2.6 billion) takeover of Madrid-based TPI, now Yell Publicidad.

It has debts of £3.8 billion and must refinance £3 billion by 2011.

In a statement to the stock market today, it said: "Yell has embarked upon a process to comprehensively refinance the group.

"This will lead to the group holding discussions with its debt holders with a view to extending the maturity and changing the terms of its debt facilities and, in due course, to discussions with its principal shareholders.

"These discussions and the resulting processes are expected to take through to the autumn to complete."

Yell crashed to a £1 billion loss last year, against £310.9 million of profits the year before.