Yell, the publisher of Yellow Pages, said this morning that it had managed to renegotiate its bank covenants but will pay higher interest on its debt facilities.

The company announced last month that it had begun discussions with its lenders on the covenants on its £3.7 billion debt after denying in June it was in danger of breaching its banking agreements.

Yell’s share price has plummeted by 77 per cent this year as investors expressed concerns about its high levels of debt. Today, its shares rose 0.5p to 93.25p on its announcement.

As well as the interest rate on the debt facility rising by 1 per cent, Yell will pay a one-off amendment fee of 0.5 per cent to consenting lenders.

The company has already suspended its dividend payments, after halving them earlier this year.

Richard Marwood, a fund manager for Axa Investment Managers, said in June: “Yell’s management needs to take decisive action, as the odds of the group staying safe is small . . . A slowing economy is not good for Yell. They may have to look at a debt-for-equity swap, as they are probably too late for a rights issue.”

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