Chairman's Letter
May 29, 2009
Dear R.H. Donnelley Business Contacts,
We at R.H. Donnelley value our relationships with customers, business partners, suppliers and the consumers who use our products and want to let all of you know about an important action the company has taken to strengthen its balance sheet and ensure R.H. Donnelley continues as the leading provider of local commercial search solutions in all of our markets.
Today, the company announced it has reached an agreement in principle with its bank lenders and bondholders on the terms of a plan to reduce total debt by approximately $6.4 billion. The company believes this will result in a more sustainable capital structure that will provide a solid financial foundation for our future.
In order to implement the restructuring, R.H. Donnelley and its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The filing will allow us to continue operating without interruption while we finalize our financial restructuring plan.
I understand that filing Chapter 11 bankruptcy may cause concern on your part, but I want to assure you that this action is being taken primarily to restructure our balance sheet, and we do not anticipate any impact on our business operations. While this difficult economy has caused us to rethink our capital structure, R.H. Donnelley’s operations remain vibrant and strong, and through the motions filed with the Bankruptcy Court, we have taken steps to ensure that there will be no change in support, service or business operations. Simply put, it will be business as usual at R.H. Donnelley throughout this process.
Let me emphasize a few key points regarding our restructuring:
- Upon completion of this process, we expect that R.H. Donnelley will be a stronger company for our customers, suppliers and partners to do business with for many years into the future.
- We will continue to innovate and grow our local search solutions to help businesses attract ready-to-buy consumers, and help consumers find the local goods/services they seek.
- We will honor all existing customer agreements. We have already requested court approval to honor all customer credits, adjustments and prepayments in the ordinary course of business, and we expect this request will be granted shortly.
- Our suppliers will be paid for all goods provided and/or services rendered on and after May 29, 2009, in the ordinary course of business.
- R.H. Donnelley currently has more than $300 million of cash on hand and continues to generate significant cash flow from its operations, thereby strengthening an already strong liquidity position.
- This strong liquidity position will allow us to continue to reinvest in our business to ensure we offer the range of products and services our customers need to support and grow their own businesses.
On behalf of the entire R.H. Donnelley team, I would like to thank you in advance for your continued support. We value our relationship with you and will keep you informed of developments relating to our progress in this debt restructuring.
Sincerely,
David C. Swanson
Chairman and CEO
R.H. Donnelley