(Reuters) – Yellow Media Inc, a subsidiary of Yellow Pages Income Fund (YLO_u.TO), said it agreed to buy local search and directories publisher Canadian Phone Directories Holdings Inc (Canpages) for about C$225 million ($220.6 million).
Yellow Media said it would purchase Canpages — which publishes 84 directories for a total circulation of about 8 million copies — from an investor group led by private equity firm HM Capital Partners LLC.
The deal will comprise of C$75 million payable in cash at closing to settle third party debt obligations and C$150 million of mandatory exchangeable promissory notes of Yellow Media.
Starting in the first quarter of 2011, the notes will be exchangeable into common shares of Yellow Media, the surviving entity following the conversion to a traditional corporate structure.
Each quarter, HM Capital will have the right to exchange C$37.5 million of the notes, representing 25 percent of the principal amount, Yellow Media said.
Yellow Page Income Fund’s units closed at C$6.22 Monday on the Toronto Stock Exchange. ($1=1.020 Canadian Dollar) (Reporting by Isheeta Sanghi in Bangalore; Editing by Ratul Ray Chaudhuri)