Directory publisher Dex One Corp. (DEXO), which is in deal to merge with yellow pages directory publisher SuperMedia Inc. (SPMD), on Monday said that each company has received the requisite shareholder approval for their proposed merger and that they both have voluntarily filed for bankruptcy protection in order to complete the deal. The companies expect the merger to close in first half of 2013.
Dex One, formerly R.H. Donnelley Corp., said the companies has filed for Chapter 11 in the United States Bankruptcy Court for the District of Delaware, to implement "pre-packaged" plans of reorganization.
Dex One and SuperMedia, which announced their plans for stock-for-stock merger of equals on August 21 last year, said they intend to use this strategic process to facilitate the merger completion.
During the restructuring process, both companies' operations would continue without interruption, and the merger would be completed within 45 to 60 days, subject to Court approval of the plans.
Dex One added that these plans intend to preserve the interests of all investors without any impairment to existing Dex One or SuperMedia equity holders and Dex One note holders.
SuperMedia President and CEO Peter McDonald said, "This process will facilitate the completion of our merger with Dex One and ensure the financial and strategic benefits of the merger identified and communicated previously remain unchanged. A substantial majority of our lenders and stockholders have pledged their support for this transaction and we remain committed to closing it in the first half of this year. The new company will be the trusted marketing consultant to help local businesses across the United States grow."
Dex One added that both companies do not need, nor intend to obtain debtor-in-possession financing during the reorganization, pursuant to the proposed plans. The companies maintain substantial cash balances and continue to generate positive cash flow.
The companies, which have filed a series of motions with the Court to ensure the continuation of normal operations, expect the Court to approve these requests shortly.
Both companies intend to work with their respective exchanges to remain listed during the restructuring.
While announcing the deal last year, the companies had noted that each companies shareholders will exchange their shares for shares in Dex Media. Dex One shareholders will receive 0.20 shares for each Dex One share they own, and Super Media shareholders will receive 0.4386 shares for each SuperMedia share they own. Following the deal, Dex One shareholders would own approximately 60 percent of the new company and SuperMedia shareholders would own the remaining about 40 percent.
It is expected that the new firm will have over 5,800 employees, including more than 3,100 consultants. Initially, the combined company will have relationships with more than 700,000 businesses.
Under the deal, Dex One's Chairman of the board Alan Schultz will be chairman of the combined company, while the president and CEO of SuperMedia, Peter McDonald, will become CEO.
In the transaction, Houlihan Lokey Capital Inc. is acting as financial advisor to Dex One, while Morgan Stanley & Co. LLC is acting as financial advisor to SuperMedia.
On Friday, Dex One shares closed trading at $2.11, down $0.05 or 2.31 percent, and SuperMedia shares settled at $4.41, down $0.08 or 1.78 percent.
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