An Interesting Speculation: SuperMedia (SPMD)

Today is the first day of trading for SuperMedia (ticker:SPMD). SuperMedia is the new name for Idearc (the old Yellow Pages company) that was spun off from Verizon three years ago and just re-emerged from bankruptcy. I own some shares of SPMD because I purchased the Idearc bonds that were recently converted into new SuperMedia shares.

The company is highly speculative, but may have a chance to survive because it has reduced its debt load from 9 Billion down to 2.75 Billion and is trying to re-invent itself from a Yellow pages company into a more general marketing company that partners with small businesses around the country.

Here are some bullet points on the stock:

  1. Idearc exited bankruptcy on Dec. 31, 2009. The new company name is SuperMedia Inc.
  2. The hedge fund Paulson & Co. owns almost half of the new SPMD stock that were acquired as part of the bankruptcy process. They made a “low ball” offer and acquired most of their shares from the banks (e.g. JP Morgan).
  3. There are currently about 15 million shares of SPMD outstanding.
  4. Previous owners of Idearc stock were wiped out by the bankruptcy. Some equity investors who met on the Idearc Yahoo message board are trying to overturn the bankruptcy in the courts. This is a real long shot effort, but they do have some strong arguments.
  5. As an owner of the Idearc unsecured bonds, I received some cash plus shares of the new SPMD stock. For every $1 million in par value, the payout was $41,988.50 in cash plus 789 shares of SPMD. Bondholders also retain the first $30 million of distributions from a Litigation Trust. All distributions from the Litigation Trust above $30 million shall be distributed Pro Rata to all Holders of Allowed Unsecured Credit Facility Claims, Allowed Unsecured Note Claims and Allowed General Unsecured Claims.
  6. SuperMedia owns the web site which is basically an on-line Yellow pages, but is more powerful and up to date than the printed Yellow pages. I checked on and was surprised that had a high ranking of #317 among all US web sites. They also control which had an Alexa US web site ranking of #24,193.
  7. SuperMedia is entering some new businesses to diversify their Yellow Pages business- web hosting, online stores, domain names and direct mail support.
  8. SuperMedia launched two innovative programs in 2009 that show some early promise:
  • – SuperGuarantee: A national consumer oriented program designed to give consumers a measure of confidence when hiring local contractors, plumbers, auto body repair shops and other eligible service providers. If a consumer is not satisfied with the service provided, SuperMedia works to resolve any issues, and if unable to resolve the issue will reimburse the consumer up to $500 of labor services incurred.
  • – SuperTradeExchange: A program for SuperMedia business clients which works like a barter system, but instead of trading one-on-one, network members trade their excess inventory or capacity for SuperBucksSM which can be used to purchase other products or services through another SuperTradeExchange member.

Full Disclosure: Long SPMD


2 responses to “An Interesting Speculation: SuperMedia (SPMD)

  1. Pingback: Supermedia- Update on 2009 Financials (SPMD) « Quant Investor’s Blog

  2. Pingback: Supermedia: Update on 2009 Financials | Reaction Radio

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