424B3 1 d420016d424b3.htm PROSPECTUS Prospectus
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Filed pursuant to Rule 424(b)(3)
Registration No. 333-185348

LOGO    LOGO

TRANSACTION PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dex One Corporation (“Dex One”) and SuperMedia Inc. (“SuperMedia”) have entered into a merger agreement providing for the combination of Dex One and SuperMedia through a series of mergers with and into a new company to be called Dex Media, Inc. (“Dex Media”).

If the transaction is completed, whether out of court or through Chapter 11 cases, (a) Dex One stockholders will receive 0.2 shares of Dex Media’s common stock for each share of Dex One common stock that they own, which reflects a 1-for-5 reverse stock split of Dex One common stock, and (b) SuperMedia stockholders will receive 0.4386 shares of Dex Media’s common stock for each share of SuperMedia common stock that they own. We anticipate that Dex One stockholders will hold approximately 60% and SuperMedia stockholders will hold approximately 40% of Dex Media’s common stock issued and outstanding immediately after the completion of the transaction. Dex Media intends to apply to list its common stock on either the New York Stock Exchange (“NYSE”) or the NASDAQ Stock Market (“NASDAQ”) under the symbol “DXM,” subject to official notice of issuance.

Dex One’s and SuperMedia’s boards of directors believe that combining the two companies will produce a company that is better positioned to enhance stockholder value than either Dex One or SuperMedia is individually. Dex One’s and SuperMedia’s boards of directors believe that the combined company will establish itself as a national provider of social, local and mobile marketing solutions with increased revenue opportunities. The combined company will also be positioned to achieve economies of scale with reduced costs and enhanced cash flow and liquidity.

Completion of the transaction out of court requires, among other things, the separate approvals of both Dex One stockholders and SuperMedia stockholders, and the consent and execution of the required financing amendments (the “financing amendments”) by the Dex One and SuperMedia senior secured creditors holding 100% of each of Dex One’s and SuperMedia’s senior secured debt, respectively (“unanimous lender approval”). To obtain the required stockholder approvals, Dex One will solicit votes on the transaction from its stockholders in advance of, and will hold a special meeting of Dex One stockholders on, March 13, 2013. At the same time, SuperMedia will solicit votes on the transaction from its stockholders in advance of, and will hold a special meeting of SuperMedia stockholders on, March 13, 2013. Dex One and SuperMedia plan to solicit the requisite approvals from their respective senior secured creditors concurrently with this solicitation of their respective stockholders.

Additionally, if Dex One is unable to obtain unanimous lender approval or majority stockholder approval outside of court, Dex One may file a Chapter 11 case to consummate the transaction, and if SuperMedia is unable to obtain unanimous lender approval or majority stockholder approval outside of court, SuperMedia may file a Chapter 11 case to consummate the transaction. Concurrently with the above described solicitations, Dex One and SuperMedia will each solicit acceptances from their respective senior secured creditors and stockholders for their respective plans of reorganization that would effect the transaction, including the financing amendments (the “Dex One prepackaged plan” in the case of Dex One and the “SuperMedia prepackaged plan”


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in the case of SuperMedia, and, together, the “prepackaged plans”) in cases under Chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”). Neither Dex One nor SuperMedia has at this time taken any action approving a bankruptcy filing, and, if the transaction is consummated outside of court, neither Dex One nor SuperMedia will commence Chapter 11 cases to consummate the prepackaged plans.

Dex One’s and SuperMedia’s boards of directors unanimously recommend that you vote “FOR” the proposals to approve and adopt the merger agreement and the transactions it contemplates and vote to “ACCEPT” the prepackaged plans to enable Dex One and SuperMedia to consummate the transaction through Chapter 11 cases, if necessary.

Your vote is very important. For purposes of voting on the merger agreement and the transactions it contemplates and the applicable prepackaged plan, you will receive a combined proxy and ballot (the “proxy and ballot”) to separately vote on each proposal. Whether or not you plan to attend the special meeting of Dex One stockholders or SuperMedia stockholders, as applicable, please submit your proxy and ballot to vote your shares to (a) approve the merger agreement and the transactions it contemplates as soon as possible to make sure your shares are represented at the applicable special meeting and (b) to accept the Dex One prepackaged plan or the SuperMedia prepackaged plan, as applicable. Your proxy and ballot must be received as set forth herein no later than 1:30 p.m. Eastern Time on March 13, 2013 to be counted.

Voting your shares to approve the merger agreement and the transactions it contemplates does not, by itself, constitute voting your shares to accept the Dex One prepackaged plan or the SuperMedia prepackaged plan, as applicable, and voting your shares to accept the Dex One prepackaged plan or the SuperMedia prepackaged plan, as applicable, does not, by itself, constitute voting your shares to approve the merger agreement and the transactions it contemplates. For your convenience, the proxy and ballot have been combined into a single document.

Information about the special meetings of stockholders, the solicitation of stockholder approvals, the merger agreement and the transactions it contemplates, the prepackaged plans and the other business to be considered by Dex One stockholders and SuperMedia stockholders prior to voting is contained in this document. Your failure to vote on the proposal to adopt the merger agreement and the transactions it contemplates will have the same effect as voting against that proposal. Your failure to vote to accept the Dex One prepackaged plan or the SuperMedia prepackaged plan, as applicable, will have the effect of voting neither for nor against that proposal.

The obligations of Dex One and SuperMedia to complete the transaction are subject to the satisfaction or waiver of conditions set forth in the merger agreement and, if applicable, the prepackaged plans. More information about Dex One, SuperMedia, Dex Media, the transaction and the prepackaged plans is contained in this document. Dex One, SuperMedia and Dex Media encourage you to read this entire document carefully, including the section entitled “Risk Factors” beginning on page 44.

We look forward to the successful combination of Dex One and SuperMedia.

 

Sincerely,     Sincerely,

LOGO

Alfred T. Mockett

   

LOGO

Peter J. McDonald

Chief Executive Officer and President     President and Chief Executive Officer
Dex One Corporation     SuperMedia Inc.

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of the securities to be issued under this document or determined that this document is accurate or complete. Any representation to the contrary is a criminal offense.


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This is a solicitation of votes to accept or reject the prepackaged plans in accordance with Section 1125 and within the meaning of Section 1126 of the Bankruptcy Code, 11 U.S.C. §§ 1125, 1126. This document has not been approved by the United States Bankruptcy Court (the “Bankruptcy Court”) or by any court. This document will be submitted to the Bankruptcy Court for approval only if Dex One and/or SuperMedia file Chapter 11 cases and seek to consummate the transaction pursuant to their respective prepackaged plans. The information in this document is subject to change. This document is not an offer to sell any securities and is not soliciting an offer to buy any securities.

This document is dated February 8, 2013 and is first being mailed to the stockholders of Dex One and SuperMedia on or about February 11, 2013.


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LOGO

1001 Winstead Drive

Cary, North Carolina 27513

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To the Stockholders of Dex One Corporation:

Notice is hereby given that a Special Meeting of Stockholders of Dex One Corporation will be held on March 13, 2013 at 1:00 p.m., local time, at Dex One’s corporate headquarters, 1001 Winstead Drive, Cary, North Carolina 27513, to consider and vote, to the extent you have not previously voted, upon the following matters:

 

   

a proposal to approve and adopt the Amended and Restated Agreement and Plan of Merger, dated as of December 5, 2012, by and among Dex One Corporation, SuperMedia Inc, Newdex, Inc. and Spruce Acquisition Sub, Inc., as such agreement may be amended from time to time, and the transactions it contemplates (the “Dex One out of court proposal”), including the Dex One merger described in the accompanying document, if both Dex One and SuperMedia obtain unanimous lender approval;

 

   

a proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to Dex One’s named executive officers that is based on or otherwise relates to the transaction (the “Dex One golden parachute proposal”); and

 

   

a proposal to approve the adjournment of the special meeting (the “Dex One adjournment proposal”), including, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve either the Dex One out of court proposal or the Dex One golden parachute proposal.

In addition, you are being asked to vote to accept the Dex One prepackaged plan (the “Dex One bankruptcy proposal”).

The Dex One board of directors has fixed the close of business on January 25, 2013 as the record date for the Dex One special meeting and for determining stockholders eligible to vote on the various proposals. Only Dex One stockholders of record at that time are entitled to notice of the Dex One special meeting or any adjournment or postponement of the Dex One special meeting and to vote for or against the Dex One out of court proposal and the Dex One bankruptcy proposal. If the Dex One special meeting is adjourned, the voting deadline (discussed below) will automatically be moved to the time that is 30 minutes after the Dex One special meeting is reconvened. Approval of the Dex One out of court proposal requires the approval by the affirmative vote of a majority of all votes entitled to be cast by the holders of Dex One common stock. Approval of the Dex One bankruptcy proposal requires the approval by the affirmative vote of 2/3 of all votes actually cast by the holders of Dex One common stock.

Whether or not you plan to attend the special meeting, please vote as described below to ensure that your shares are represented and voted in accordance with your wishes.

Please carefully read and follow the instructions enclosed in your proxy and ballot for completing the proxy and ballot. Please complete, sign, date and return your proxy and ballot, indicating your vote for each of the proposals, in the accompanying self-addressed, stamped envelope so that it is actually received by Epiq Systems (“Epiq”), which is acting as the voting agent, by 1:30 p.m. Eastern Time on March 13, 2013, the date of the special meeting. Any record holder of Dex One common stock eligible to vote who is present at the Dex One special meeting may vote in person by submitting their proxy and ballot at the special meeting.


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Stockholders who hold their shares through a broker, bank or other holder of record must instruct the holder of record how to vote their shares, or, if their proxy and ballot is pre-validated by the holder of record, must return the pre-validated proxy and ballot to Epiq (the voting agent). In order to provide voting instructions to the holder of record of your shares, please refer to the materials forwarded by your broker, bank or other holder of record.

The Dex One board of directors unanimously recommends that the Dex One stockholders vote “FOR” the proposal to approve and adopt the merger agreement and the transactions it contemplates, vote “FOR” the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid to Dex One’s named executive officers that is based on or otherwise relates to the transaction, vote “FOR” the proposal to approve the adjournment of the Dex One special meeting, if necessary or appropriate, to permit further solicitation of proxies and vote to “ACCEPT” the Dex One prepackaged plan.

The joint proxy statement/prospectus and disclosure statement accompanying this notice provides a detailed description of the Dex One merger, the merger agreement and the transactions it contemplates, the Dex One prepackaged plan and the other matters to be considered in advance of, and at, the Dex One special meeting of stockholders. You are urged to read carefully the entire document, including the appendices and other documents referred to therein.

By Order of the Board of Directors,

 

LOGO

Mark W. Hianik

Senior Vice President, General Counsel, Chief Administrative Officer and Corporate Secretary

Cary, North Carolina

February 8, 2013

YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY AND BALLOT, INDICATING YOUR VOTE FOR EACH OF THE PROPOSALS, IN THE ACCOMPANYING SELF-ADDRESSED, STAMPED ENVELOPE SO THAT IT IS ACTUALLY RECEIVED BY EPIQ PRIOR TO THE VOTING DEADLINE.


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LOGO

2200 West Airfield Drive

P.O. Box 619810

D/FW Airport, Texas 75261

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To the Stockholders of SuperMedia Inc.:

Notice is hereby given that a Special Meeting of Stockholders of SuperMedia Inc. will be held on March 13, 2013 at 12:00 p.m., local time, at SuperMedia’s corporate headquarters, 2200 West Airfield Drive, D/FW Airport, Texas 75261 to consider and vote upon the following matters:

 

   

a proposal to approve and adopt the Amended and Restated Agreement and Plan of Merger, dated as of December 5, 2012, by and among Dex One Corporation, SuperMedia Inc, Newdex, Inc. and Spruce Acquisition Sub, Inc., as such agreement may be amended from time to time, and the transactions it contemplates (the “SuperMedia out of court proposal”), including the SuperMedia merger described in the accompanying document, if both Dex One and SuperMedia obtain unanimous lender approval;

 

   

a proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to SuperMedia’s named executive officers that is based on or otherwise relates to the transaction (the “SuperMedia golden parachute proposal”); and

 

   

a proposal to approve the adjournment of the special meeting (the “SuperMedia adjournment proposal”), including, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve either the SuperMedia out of court proposal or the SuperMedia golden parachute proposal.

In addition, you are being asked to vote to accept the SuperMedia prepackaged plan (the “SuperMedia bankruptcy proposal”).

The SuperMedia board of directors has fixed the close of business on January 25, 2013 as the record date for the SuperMedia special meeting and for determining stockholders eligible to vote on the various proposals. Only SuperMedia stockholders of record at that time are entitled to notice of the SuperMedia special meeting or any adjournment or postponement of the SuperMedia special meeting and to vote for or against the SuperMedia out of court proposal and the SuperMedia bankruptcy proposal. If the SuperMedia special meeting is adjourned, the voting deadline (discussed below) will automatically be moved to the time that is 30 minutes after the SuperMedia special meeting is reconvened. Approval of the SuperMedia out of court proposal requires the approval by the affirmative vote of a majority of all votes entitled to be cast by the holders of SuperMedia common stock. Approval of the SuperMedia bankruptcy proposal requires the approval by the affirmative vote of 2/3 of all votes actually cast by the holders of SuperMedia common stock.

Whether or not you plan to attend the special meeting, please vote as described below to ensure that your shares are represented and voted in accordance with your wishes.

Please carefully read and follow the instructions enclosed in your proxy and ballot for completing the proxy and ballot. Please complete, sign, date and return your proxy and ballot, indicating your vote for each of the proposals, in the accompanying self-addressed, stamped envelope so that it is actually received by Epiq Systems (“Epiq”), which is acting as the voting agent, by 1:30 p.m. Eastern Time on March 13, 2013, the date of the special meeting. Any record holder of SuperMedia common stock eligible to vote who is present at the SuperMedia special meeting may vote in person by submitting their proxy and ballot at the special meeting.


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Stockholders who hold their shares through a broker, bank or other holder of record must instruct the holder of record how to vote their shares, or, if their proxy and ballot is pre-validated by the holder of record, must return the pre-validated proxy and ballot to Epiq (the voting agent). In order to provide voting instructions to the holder of record of your shares, please refer to the materials forwarded by your broker, bank or other holder of record.

The SuperMedia board of directors unanimously recommends that the SuperMedia stockholders vote “FOR” the proposal to approve and adopt the merger agreement and the transactions it contemplates, vote “FOR” the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid to SuperMedia’s named executive officers that is based on or otherwise relates to the transaction, and vote “FOR” the proposal to approve the adjournment of the SuperMedia special meeting, if necessary or appropriate, to permit further solicitation of proxies and vote to “ACCEPT” the SuperMedia prepackaged plan.

The joint proxy statement/prospectus and disclosure statement accompanying this notice provides a detailed description of the SuperMedia merger, the merger agreement and the transactions it contemplates, the SuperMedia prepackaged plan and the other matters to be considered in advance of, and at, the SuperMedia special meeting of stockholders. You are urged to read carefully the entire document, including the appendices and other documents referred to therein.

By Order of the Board of Directors,

LOGO

Cody Wilbanks,

Executive Vice President, General Counsel and Secretary

D/FW Airport, Texas

February 8, 2013

YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY AND BALLOT, INDICATING YOUR VOTE FOR EACH OF THE PROPOSALS, IN THE ACCOMPANYING SELF-ADDRESSED, STAMPED ENVELOPE SO THAT IT IS ACTUALLY RECEIVED BY EPIQ PRIOR TO THE VOTING DEADLINE.


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ADDITIONAL INFORMATION

This document incorporates by reference important business and financial information about Dex One from documents that are not included in or delivered with this document. You can obtain documents incorporated by reference in this document, other than certain exhibits to those documents, free of charge through the Securities and Exchange Commission’s website (www.sec.gov) or by requesting them in writing or by telephone from Dex One at the following address:

 

Dex One Corporation
1001 Winstead Drive
Cary, North Carolina 27513
(919) 297-1600
Attn: Investor Relations

In addition, if you have questions about the transaction or the special meetings, or if you need to obtain copies of the accompanying joint proxy statement/prospectus and disclosure statement, a proxy and ballot, election forms or other documents incorporated by reference in the joint proxy statement/prospectus and disclosure statement, you may contact Epiq using the contact information below. You will not be charged for any of the documents you request.

Epiq Systems

757 Third Avenue

New York, New York 10017

(866) 734-9393 (telephone)

(646) 282-2501 (fax)

If you would like to request any documents, please do so by March 6, 2013 in order to receive them before the special meetings.

For a more detailed description of the information incorporated by reference in the accompanying joint proxy statement/prospectus and disclosure statement and how you may obtain it, see the section entitled “Where You Can Find More Information” in the accompanying joint proxy statement/prospectus and disclosure statement.


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ABOUT THIS DOCUMENT

This document, which forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission (the “SEC”) by Dex Media, constitutes a prospectus of Dex Media under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the shares of Dex Media common stock to be issued to Dex One and SuperMedia stockholders in connection with the mergers. In addition this document also constitutes a joint proxy statement for both Dex One and SuperMedia under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). It also constitutes a notice of meeting with respect to the special meeting of Dex One stockholders and a notice of meeting with respect to the special meeting of SuperMedia stockholders. This document also constitutes a solicitation of acceptances of the prepackaged plans in accordance with Section 1125(g) of the Bankruptcy Code. This solicitation of acceptances of the prepackaged plans is being conducted to obtain sufficient acceptances of the Dex One prepackaged plan and the SuperMedia prepackaged plan by Dex One’s and SuperMedia’s stockholders, respectively, prior to the filing of voluntary cases under Chapter 11 of the Bankruptcy Code. Because no Chapter 11 cases have yet been commenced, this document has not been approved by any court as satisfying the requirements of the Bankruptcy Code. Neither Dex One nor SuperMedia has at this time taken any action approving a bankruptcy filing, and, if the transaction is consummated outside of court, neither Dex One nor SuperMedia will commence a bankruptcy case to consummate the prepackaged plans.

You should rely only on the information contained in or incorporated by reference into this document. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this document. This document is dated February 8, 2013, and you should not assume that the information contained in this document is accurate as of any date other than that date. In addition, you should not assume that the information incorporated by reference into this document is accurate as of any date other than the date of the incorporated document. Neither our mailing of this document to Dex One and SuperMedia stockholders nor the issuance by Dex Media of shares of common stock pursuant to the mergers will create any implication to the contrary. This document contains summaries of certain provisions of the prepackaged plans and certain other documents and financial information. This information is provided for the purpose of soliciting proxies for the various proposals described in this document and for soliciting acceptances of the prepackaged plans and should not be relied upon for any purpose other than to determine whether and how to submit proxies and ballots, as applicable, to vote with respect to the various stockholder proposals to be considered in advance of, and at, the special meetings of Dex One stockholders and SuperMedia stockholders and, in the case of the bankruptcy proposals, that you may accept in advance of the meeting. Dex One and SuperMedia believe that the summaries contained in this document are fair and accurate. The summaries of the financial information and the documents that are attached to, or incorporated by reference in, this document are qualified in their entirety by reference to such information and documents. In the event of any inconsistency or discrepancy between a description in this document and the terms and provisions of the prepackaged plans or the other documents and financial information incorporated in this document by reference, the prepackaged plans or the other documents and financial information, as the case may be, shall govern for all purposes.

Except as otherwise provided in the prepackaged plans or in accordance with applicable law, Dex One and SuperMedia are under no duty to update or supplement this document. If the Bankruptcy Court approves this document, such approval does not constitute a guarantee of the accuracy or completeness of the information contained herein or an endorsement of the merits of the prepackaged plans by the Bankruptcy Court. The statements and financial information contained in this document have been made as of the date of this document unless otherwise specified. Stockholders reviewing this document should not assume at the time of such review that there have been no changes in the facts set forth in this document since the date of this document. Each stockholder should carefully review either the Dex One prepackaged plan or the SuperMedia prepackaged plan, as applicable, and this document in their entirety before casting a vote. No stockholder should rely on any information, representations, or inducements made to obtain an acceptance of the prepackaged plans that are other than as set forth, or are inconsistent with, the information contained in this document, the documents attached to this document and the prepackaged plans. This document does not constitute legal, business, financial, or tax advice. Any entities desiring any such advice should consult with their own advisors.

If the transaction is consummated through Chapter 11 cases, the securities described in this document to be issued under the prepackaged plans may be issued in compliance with the registration requirements of the


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Securities Act or exempt from the registration requirements of Section 5 therein pursuant to Section 1145 of the Bankruptcy Code, Section 4(a) of the Securities Act, or any other available exemption from registration under the Securities Act, as applicable.

Regarding contested matters, adversary proceedings, and other pending, threatened, or potential litigation or other actions, this document does not constitute, and may not be construed as, an admission of fact, liability, stipulation, or waiver by Dex One and SuperMedia or any other party, but rather as a statement made in the context of settlement negotiations in accordance with Rule 408 of the Federal Rules of Evidence.

This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation. Information contained in this document regarding Dex One and Dex Media has been provided by Dex One and information contained in this document regarding SuperMedia has been provided by SuperMedia.

All references in this document to “Dex One” refer to Dex One Corporation, a Delaware corporation , except when such references are made in connection with the Dex One prepackaged plan, in which case, references to “Dex One” refer to Dex One and its subsidiaries, as applicable; all references in this document to “Dex Media” refer to Dex Media, Inc., a Delaware corporation and a wholly owned subsidiary of Dex One (currently named Newdex, Inc.), except when such references are made in connection with the prepackaged plans, in which case, references to “Dex Media” refer to Dex Media and its subsidiaries, as applicable; all references in this document to “Merger Sub” refer to Spruce Acquisition Sub, Inc., a Delaware corporation and wholly owned subsidiary of Newdex; all references in this document to “SuperMedia” refer to SuperMedia Inc., a Delaware corporation, except when such references are made in connection with the SuperMedia prepackaged plan, in which case, references to “SuperMedia” refer to SuperMedia and its subsidiaries that commence Chapter 11 cases, as applicable; all references in this document to the “SuperMedia credit facility” refer to the term loan agreement entered into by SuperMedia in connection with its emergence from Chapter 11 on December 31, 2009; all references in this document to “DME” refer to Dex One’s subsidiary Dex Media East, Inc. and references to the “DME credit facility” refer to the amended and restated DME credit agreement entered into in connection with Dex One’s emergence from bankruptcy on January 29, 2010; all references in this document to “DMW” refer to Dex One’s subsidiary Dex Media West, Inc. and references to the “DMW credit facility” refer to the amended and restated DMW credit agreement entered into in connection with Dex One’s emergence from bankruptcy on January 29, 2010; and all references in this document to “RHDI” refer to Dex One’s subsidiary R. H. Donnelley Inc. and references to the “RHDI credit facility” refer to the amended and restated RHDI credit agreement entered into in connection with Dex One’s emergence from bankruptcy on January 29, 2010. Dex One currently has a subsidiary named Dex Media, Inc. Dex Media, Inc. is the intermediate holding company of DME and DMW. Dex Media, Inc. will change its name to Dex Media Holdings, Inc. upon consummation of the transaction. References to the “Dex One credit facilities” refer to the DME credit facility, the DMW credit facility and the RHDI credit facility collectively. Unless otherwise indicated or as the context requires, all references in this document to “we,” “our” and “us” refer to Dex One, Dex Media and SuperMedia collectively; and, unless otherwise indicated or as the context requires, all references to the “merger agreement” refer to the Amended and Restated Agreement and Plan of Merger, dated as of December 5, 2012, by and among Dex One Corporation, SuperMedia Inc., Newdex, Inc. and Spruce Acquisition Sub, Inc., a copy of which is included as Appendix A to this document. Dex One and SuperMedia, subject to and following completion of the mergers contemplated by the merger agreement, are sometimes referred to in this document as the “combined company.”


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TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS

     iv   

SUMMARY

     1   

SELECTED HISTORICAL FINANCIAL DATA OF DEX ONE

     34   

SELECTED HISTORICAL FINANCIAL DATA OF SUPERMEDIA

     36   

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     39   

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     42   

RISK FACTORS

     44   

THE DEX ONE SPECIAL MEETING AND VOTING INSTRUCTIONS

     61   

THE SUPERMEDIA SPECIAL MEETING AND VOTING INSTRUCTIONS

     65   

INFORMATION ABOUT THE BUSINESSES

     69   

PROPOSAL 1: THE TRANSACTION

     72   

Background of the Transaction

     72   

Dex One’s Reasons for the Transaction; Recommendation of the Dex One Board of Directors

     87   

SuperMedia’s Reasons for the Transaction; Recommendation of the SuperMedia Board of Directors

     90   

Opinion of Dex One’s Financial Advisor

     93   

Opinion of SuperMedia’s Financial Advisor

     102   

Financial Forecasts

     111   

PROPOSAL 2: NON-BINDING ADVISORY VOTE ON GOLDEN PARACHUTE COMPENSATION

     128   

PROPOSAL 3: APPROVAL OF ADJOURNMENT OF SPECIAL MEETING

     129   

THE MERGER AGREEMENT

     130   

Structure of the Transaction

     130   

Treatment of Stock Awards

     131   

Closing and Effective Time of the Transaction

     132   

Distribution of Dex Media Shares

     133   

Representations and Warranties

     134   

Covenants and Agreements

     136   

Agreement Not to Solicit Other Offers

     138   

Expenses and Fees

     141   

Conditions to Completion of the Transaction

     141   

Amendment and Waiver of the Merger Agreement

     142   

Termination of the Merger Agreement

     143   

Expense Reimbursement

     144   

Indemnification and Insurance

     144   

Tax Sharing Agreement

     145   

Shared Services Agreement

     146   

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     147   

THE PREPACKAGED PLANS

     158   

The Dex One Prepackaged Plan

     158   

The Dex One Support Agreement

     178   

The SuperMedia Prepackaged Plan

     180   

The SuperMedia Support Agreement

     199   

DESCRIPTION OF CERTAIN INDEBTEDNESS

     202   

ACCOUNTING TREATMENT

     211   

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTION

     211   

COMPARISON OF RIGHTS OF DEX ONE AND SUPERMEDIA STOCKHOLDERS

     217   

COMPARATIVE MARKET PRICES AND SHARE INFORMATION

     230   

ADDITIONAL INFORMATION ABOUT SUPERMEDIA

     231   

SuperMedia’s Business

     231   

 

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SuperMedia’s Properties

     243   

SuperMedia’s Legal Proceedings

     244   

SuperMedia’s Management’s Discussion and Analysis of Financial Condition and Results of Operations

     247   

Changes In and Disagreements with SuperMedia’s Accountants on Accounting and Financial Disclosure

     266   

SuperMedia’s Executive Officer and Director Compensation

     267   

Security Ownership of Certain Beneficial Owners and Management of SuperMedia and Related Stockholder Matters

     280   

Review and Approval of SuperMedia’s Transaction with Related Persons

     283   

SECURITIES LAW MATTERS

     284   

LEGAL MATTERS

     286   

EXPERTS

     286   

STOCKHOLDER PROPOSALS

     286   

OTHER MATTERS

     287   

COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

     287   

WHERE YOU CAN FIND MORE INFORMATION

     287   

 

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APPENDICES

 

APPENDIX A

  

Amended and Restated Agreement and Plan of Merger, dated as of December 5, 2012, by and among Dex One Corporation, SuperMedia Inc., Newdex, Inc. and Spruce Acquisition Sub, Inc.

     A-1   

APPENDIX B

  

Form of Amended and Restated Certificate of Incorporation of Dex Media, Inc.

     B-1   

APPENDIX C

  

Form of By-Laws of Dex Media, Inc.

     C-1   

APPENDIX D

  

Opinion of Houlihan Lokey Capital, Inc.

     D-1   

APPENDIX E

  

Opinion of Morgan Stanley & Co. LLC

     E-1   

APPENDIX F

  

Form of Prepackaged Chapter 11 Plan of Dex One Corporation, et al.

     F-1   

APPENDIX G

  

Form of Prepackaged Chapter 11 Plan of SuperMedia Inc., et al.

     G-1   

APPENDIX H

  

Unaudited Liquidation Analysis of Dex One Corporation

     H-1   

APPENDIX I

  

Unaudited Liquidation Analysis of SuperMedia Inc.

     I-1   

APPENDIX J

  

Unaudited Valuation Analysis of Dex Media, Inc.

     J-1   

APPENDIX K

  

Form of Dex One Corporation Support Agreement

     K-1   

APPENDIX L

  

Form of SuperMedia Support Agreement

     L-1   

APPENDIX M

  

Consolidated financial statements of SuperMedia Inc. and its subsidiaries at December 31, 2011 and 2010 and for each of the three years in the period ended December 31, 2011

     M-1   

APPENDIX N

  

Consolidated financial statements of SuperMedia Inc. and its subsidiaries at September 30, 2012 and December 31, 2011 and for the three and nine month periods ended September 30, 2012

     N-1   

APPENDIX O

  

Effect of new accounting standard on SuperMedia’s consolidated statement of comprehensive income for each of the three years in the period ended December 31, 2011

     O-1   

 

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QUESTIONS AND ANSWERS

The following are some questions that you, as a stockholder of either Dex One or SuperMedia, may have regarding the merger agreement, the transaction, the financing amendments, the prepackaged plans, and the special meetings of stockholders and the answers to those questions. Dex One and SuperMedia urge you to read the remainder of this document carefully because the information in this section does not provide all the information that might be important to you in determining how to vote on the various proposals. Additional important information is also contained in the appendices to, and the documents incorporated by reference into, this document.

General

 

Q: What is the transaction being proposed?

 

A: The transaction being proposed is a stock-for-stock merger between Dex One and SuperMedia under the terms of a merger agreement that is described in this document. First, the merger agreement provides for Dex One to merge with and into its direct, wholly owned subsidiary, Dex Media, with Dex Media surviving the merger. This merger is sometimes referred to in this document as the “Dex One merger.” Second, immediately following the consummation of the Dex One merger, the merger agreement provides for the merger of Spruce Acquisition Sub, Inc. (“Merger Sub”), a wholly owned subsidiary of Dex Media, with and into SuperMedia, with SuperMedia surviving the merger as a direct wholly owned subsidiary of Dex Media. This merger is sometimes referred to in this document as the “SuperMedia merger.” As a result of the mergers, SuperMedia will be a direct wholly-owned subsidiary of Dex Media. This series of mergers is referred to herein as the “mergers” or the “transaction.” A copy of the merger agreement is attached to this document as Appendix A.

 

Q: What are the financing amendments?

 

A: It is a condition to consummating the transaction in an out of court process that three of Dex One’s wholly owned subsidiaries, RHDI, DME and DMW, which are borrowers under their respective secured credit facilities, and SuperMedia obtain approval from their respective senior secured lenders to amend and restate their respective senior secured credit facilities. For the RHDI, DME and DMW secured credit facilities, the maturity dates will be extended from October 24, 2014 to December 31, 2016. The maturity date of the SuperMedia secured credit facility will be extended from December 31, 2015 to December 31, 2016. The interest rate spreads under the amended and restated credit facilities will be revised in accordance with the table below. For additional information regarding the various secured credit facilities, please refer to “Description of Certain Indebtedness.”

 

Credit Facility

   Current Interest Rate Spreads    

Amended and Restated Interest

Rate Spreads

DME Credit Facility    Leverage
Ratio:
   ABR

Spread
    Eurodollar

Spread
    Eurodollar Spread: 3.00%

 

ABR Spread: 2.00%

   ³2.75x      1.50     2.50  
   ³2.50x

but

<2.75x

     1.25     2.25  
   <2.50x      1.00     2.00  
DMW Credit Facility    Leverage
Ratio:
   ABR
Spread
    Eurodollar
Spread
    Eurodollar Spread: 5.00%

 

ABR Spread: 4.00%

   ³2.75x      3.50     4.50  
   ³2.50x but

<2.75x

     3.25     4.25  
   <2.50x      3.00     4.00  

 

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Credit Facility

   Current Interest Rate Spreads    

Amended and Restated Interest

Rate Spreads

RHDI Credit Facility    Leverage
Ratio:
   ABR
Spread
    Eurodollar
Spread
    Eurodollar Spread: 6.75%

 

ABR Spread: 5.75%

   ³4.25x      5.25     6.25  
   <4.25x      5.00     6.00  

SuperMedia Credit Facility

       
 
ABR
Spread
 
  
   
 
Eurodollar
Spread
 
  
 

Eurodollar Spread: 8.60%

 

ABR Spread: 7.60%

        8.00     7.00  

 

Q: What are the prepackaged plans?

 

A: The prepackaged plans are an alternative means by which to consummate the transaction, including the financing amendments, through Chapter 11 cases. In the event that either Dex One or SuperMedia is unable to obtain unanimous lender approval or the approval of holders of a majority of its common stock to consummate the transaction outside of court, Dex One or SuperMedia, as applicable, may seek confirmation of the prepackaged plans in Chapter 11 cases. At this time, neither Dex One nor SuperMedia has taken any action approving a bankruptcy filing. A copy of the Dex One prepackaged plan is attached to this document as Appendix F and a copy of the SuperMedia prepackaged plan is attached to this document as Appendix G. For a more detailed description of the prepackaged plans, see “The Prepackaged Plans.” A description of the votes required to accept the prepackaged plans is included later in this “Questions and Answers” section.

 

Q: What are the primary costs, disadvantages and advantages of consummating the transaction through the prepackaged plans rather than outside of court?

 

A: Consummating the transaction through the prepackaged plans adds extra costs and uncertainties inherent in the bankruptcy process. The costs of the bankruptcy process could be material and could include both direct costs, including fees paid to attorneys and professionals, and indirect costs, such as adverse impacts on customer relations. In addition, there can be no assurance that the Bankruptcy Court will confirm the prepackaged plans.

On the other hand, consummating the transaction through the prepackaged plans provides several benefits to Dex One and SuperMedia’s stockholders, including the ability to consummate the transaction without obtaining unanimous lender approval of the financing amendments.

 

Q: Why am I receiving this document?

 

A: You are receiving this document because you were a stockholder of record of Dex One or SuperMedia on the record date for the Dex One or SuperMedia special meeting, as applicable, and therefore entitled to vote on the transaction and the applicable prepackaged plan. Dex One stockholders and SuperMedia stockholders are requested to (1) approve and adopt the merger agreement and the transactions it contemplates and (2) accept the prepackaged plans to permit the transaction to be consummated even if unanimous lender approval or majority stockholder approval is not obtained.

This document contains important information about the transaction, the financing amendments, the prepackaged plans, the solicitation of votes on the various proposals and the meetings of the respective stockholders of Dex One and SuperMedia, and you should read it carefully and in its entirety. Dex One and SuperMedia will hold separate special meetings. The enclosed proxy and ballot, which includes detailed instructions for completing the proxy and ballot, allows you to vote your shares without attending your respective special meeting in person.

Your vote is important. We encourage you to vote as soon as possible and, in any case, you must submit your proxy and ballot so that it is received no later than the voting deadline.

 

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Dex One’s and SuperMedia’s boards of directors unanimously recommend that you vote “FOR” the proposals to approve and adopt the merger agreement and vote to “ACCEPT” the applicable prepackaged plan.

 

Q: What will I receive in the transaction?

 

A: If the transaction is completed, whether completed out of court or through Chapter 11 cases, (a) Dex One stockholders will receive 0.2 shares of Dex Media common stock for each share of Dex One common stock that they hold at the effective time of the Dex One merger (the “Dex One Exchange Ratio”), and (b) SuperMedia stockholders will receive 0.4386 shares of Dex Media common stock for each share of SuperMedia common stock that they hold at the effective time of the SuperMedia merger (the “SuperMedia Exchange Ratio”). The quotient of the SuperMedia Exchange Ratio and the Dex One Exchange Ratio is referred to herein as the “exchange ratio.” We anticipate that Dex One stockholders will hold approximately 60% and SuperMedia stockholders will hold approximately 40% of Dex Media’s common stock issued and outstanding immediately after the completion of the transaction. Dex One and SuperMedia stockholders will also be entitled to any dividends declared and paid by Dex Media with a record date after the effective time of the transaction after their shares of Dex One common stock have been converted or after their shares of SuperMedia common stock have been converted or their certificates representing shares of SuperMedia common stock have been surrendered, as applicable.

 

Q: What is the value of the merger consideration?

 

A: Dex Media will issue 0.2 shares of Dex Media common stock for each share of Dex One common stock and 0.4386 shares of Dex Media common stock for each share of SuperMedia common stock whether the transaction is consummated out of court or in Chapter 11 cases. Therefore, the value of the merger consideration that Dex One and SuperMedia stockholders receive will depend on the price per share of Dex Media common stock, at and after the effective time of the transaction. That price will not be known at the time of the special meetings (the voting deadline) and may be less than the current price of Dex One or SuperMedia common stock or the price of such stock at the time of the special meetings. We urge you to obtain current market quotations for Dex One common stock and SuperMedia common stock. See “Risk Factors.”

The following table shows the closing sale prices of Dex One common stock and SuperMedia common stock as reported on the NYSE or NASDAQ, respectively, on August 20, 2012, the last trading day before we announced the transaction, and on February 6, 2013, the last practicable trading day before the distribution of this document. This table also shows the implied value of the transaction consideration proposed for each share of Dex One common stock and SuperMedia common stock.

 

     Dex One
Common
Stock
     SuperMedia
Common
Stock
     Implied Value of
One Share of
Dex One
Common Stock(1)
     Implied Value of
One Share of
SuperMedia
Common Stock(2)
 

At August 20, 2012

   $ 1.24       $ 2.58       $ 1.24       $ 2.72   

At February 6, 2013

     1.77         3.91         1.77         3.88   

 

(1) As a result of the Dex One merger, for each share of Dex One common stock, each Dex One stockholder will receive one-fifth of a share of Dex Media common stock. Consequently, the implied value of a share of Dex Media common stock for any given day is calculated as five times the closing price of Dex One common stock on such day ($6.20 at August 20, 2012 and $8.85 at February 6, 2013, which reflects a 1-for-5 reverse stock split of Dex One common stock). While the implied value of a share of Dex Media is five times the implied value of a share of Dex One common stock, Dex One stockholders will receive one-fifth of a share of Dex Media common stock, so it is estimated that the mergers will have no economic effect on a holder of Dex One common stock.
(2) Calculated by multiplying the implied value of Dex Media common stock ($6.20 at August 20, 2012 and $8.85 at February 6, 2013) by 0.4386 (the exchange ratio for SuperMedia common stock).

 

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Q: When and where will the special meetings be held?

 

A: The Dex One special meeting will be held at Dex One’s corporate headquarters, 1001 Winstead Drive, Cary, North Carolina 27513, on March 13, 2013 at 1:00 p.m., local time.

The SuperMedia special meeting will be held at SuperMedia’s corporate headquarters, 2200 West Airfield Drive, D/FW Airport, Texas 75261, on March 13, 2013 at 12:00 p.m., local time.

 

Q: Who is entitled to vote?

 

A: The record date for the Dex One special meeting is January 25, 2013. Only record holders of shares of Dex One common stock at the close of business on such date are entitled to notice of the Dex One special meeting or any adjournment or postponement of the Dex One special meeting and to vote for or against the Dex One out of court proposal and to accept or reject Dex One prepackaged plan. If the Dex One special meeting is adjourned, the voting deadline will automatically be moved to the time that is 30 minutes after the Dex One special meeting is reconvened.

The record date for the SuperMedia special meeting is January 25, 2013. Only record holders of shares of SuperMedia common stock at the close of business on such date are entitled to notice of the SuperMedia special meeting or any adjournment or postponement of the SuperMedia special meeting and to vote for or against the SuperMedia out of court proposal and the SuperMedia bankruptcy proposal. If the SuperMedia special meeting is adjourned, the voting deadline will automatically be moved to the time that is 30 minutes after the SuperMedia special meeting is reconvened.

 

Q: When is the deadline to submit my proxy and ballot to ensure that my vote regarding the Dex One prepackaged plan or SuperMedia prepackaged plan, as applicable, is counted?

 

A: The voting deadline to vote to accept or reject each of the prepackaged plans is 1:30 p.m. prevailing Eastern Time, on March 13, 2013. After the voting deadline has passed, all votes will be collected by Epiq, who will count the votes regarding each prepackaged plan.

 

Q: What constitutes a quorum at the special meetings?

 

A: A majority of the votes entitled to be cast by the shares entitled to vote must be present or represented by proxy to constitute a quorum for action on the matters to be voted upon at the Dex One special meeting. All shares of Dex One common stock represented at the Dex One special meeting, including abstentions and broker non-votes, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the Dex One special meeting. For the avoidance of doubt, stockholders may submit their proxy and ballot to vote on the matters to be presented at the Dex One special meeting in advance of the Dex One special meeting.

A majority of the votes entitled to be cast by the shares entitled to vote must be present or represented by proxy to constitute a quorum for action on the matters to be voted upon at the SuperMedia special meeting. All shares of SuperMedia common stock represented at the SuperMedia special meeting, including abstentions and broker non-votes, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the SuperMedia special meeting. For the avoidance of doubt, stockholders may submit their proxy and ballot to vote on the matters to be presented at the SuperMedia special meeting in advance of the SuperMedia special meeting.

 

Q: If my shares are held in street name by my broker, will my broker vote my shares for me?

 

A:

If you hold your shares in a stock brokerage account or if your shares are held by a bank or nominee (that is, in street name), you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your bank or broker. Please note that you may not

 

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  vote shares held in street name by returning a proxy and ballot directly to Dex One or SuperMedia or Epiq or by voting in person at your special meeting unless you provide a “legal proxy,” which you must obtain from your bank or broker. Further, brokers who hold shares of Dex One or SuperMedia common stock on behalf of their customers may not give a proxy to Dex One or SuperMedia to vote those shares on the proposals unless they have received voting instructions from their customers.

If you are a Dex One or SuperMedia stockholder that holds shares in street name and you do not instruct your broker on how to vote your shares, your broker may not vote your shares, which will have the same effect as not voting on the Dex One prepackaged plan or SuperMedia prepackaged plan, as applicable; voting against the proposal to approve and adopt the merger agreement and the transactions it contemplates; and voting against the other proposals.

Notwithstanding the foregoing, if your bank or nominee elects to provide you with a “pre-validated” proxy and ballot you should vote by signing and returning the enclosed proxy and ballot to Epiq in the postage-paid envelope provided by the voting deadline.

 

Q: How do I vote to approve the consummation of the transaction outside of court, or through Chapter 11 cases, if I am a stockholder of record?

 

A: If you do not hold your stock in street name and instead are a stockholder of record of Dex One as of the record date for the Dex One special meeting or a stockholder of record of SuperMedia as of the record date for the SuperMedia special meeting, you may vote in person by attending your special meeting and submitting your proxy and ballot to Epiq, the voting agent. Alternatively, you may vote by signing and returning the enclosed proxy and ballot to Epiq in the postage-paid envelope provided. In either case, your proxy and ballot must be actually received by Epiq by the voting deadline.

If you hold Dex One shares or SuperMedia shares in the name of a bank or broker, please see the discussion above.

 

Q: How many votes do I have?

 

A: With respect to each proposal to be presented at the Dex One special meeting, holders of Dex One common stock are entitled to one vote for each share of Dex One common stock owned at the close of business on the Dex One record date. At the close of business on the Dex One record date, there were 51,309,809 shares of Dex One common stock outstanding and entitled to vote at the Dex One special meeting.

With respect to each proposal to be presented at the SuperMedia special meeting, holders of SuperMedia common stock are entitled to one vote for each share of SuperMedia common stock owned at the close of business on the SuperMedia record date. At the close of business on the SuperMedia record date, there were 15,664,432 shares of SuperMedia common stock outstanding and entitled to vote at the SuperMedia special meeting.

 

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Q: What vote is required to approve each proposal?

 

A: The votes required, as well as the effects of abstentions/shares present but not voted and broker non-votes for each of the proposals, at the special meetings of both Dex One stockholders and SuperMedia stockholders, are detailed in the following chart:

 

Proposal

 

Required Stockholder Vote

 

Effect of Abstentions/

Shares Present but not Voted

 

Effect of Broker Non-Votes

Merger Agreement Proposal (No. 1)   Majority of outstanding
shares of common stock
eligible to vote
  Same effect as a vote
against the proposal
  Same effect as a vote
against the proposal
Golden Parachute Proposal (No. 2)   Majority of shares of
common stock
represented at the
special meeting and
entitled to vote
  Same effect as a vote
against the proposal
  No effect
Adjournment Proposal (No. 3)   Majority of shares of
common stock
represented at the
special meeting and
entitled to vote
  Same effect as a vote
against the proposal
  No effect

 

Q: What vote is required for stockholders to accept the prepackaged plans?

 

A: The votes required, as well as the effects of abstentions/failures to vote and broker non-votes, for stockholders to accept the prepackaged plans are detailed in the following chart:

 

Required Stockholder Vote

  

Effect of Abstentions/

Failures to Vote

  

Effect of Broker Non-Votes

At least 2/3 in amount of common stock that vote to either “accept” or “reject” the applicable prepackaged plan    No effect    No effect

Notwithstanding the required stockholder vote, under the “cram down” provisions of the Bankruptcy Code, a plan may be confirmed even if stockholders do not vote to accept the plan if the Bankruptcy Court finds that the plan otherwise satisfies the statutory requirements and does not discriminate unfairly and is fair and equitable regarding each class of claims and interests that is impaired under, and has not accepted, the plan. Accordingly, if Dex One senior secured lenders vote to accept the Dex One prepackaged plan but Dex One stockholders do not vote to accept such plan, Dex One may still seek to confirm the plan under the “cram down” provisions of the Bankruptcy Code. SuperMedia may seek to do the same regarding the SuperMedia prepackaged plan if SuperMedia senior secured lenders vote to accept such plan but SuperMedia stockholders do not vote to accept the plan.

 

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Q: What vote is required for Dex One’s and SuperMedia’s senior secured creditors to accept the prepackaged plans?

 

A: For each of Dex One’s and SuperMedia’s senior secured credit facilities, the votes required to accept the prepackaged plans are detailed in the following chart:

 

Credit Facility

   Required Vote to Accept the Prepackaged Plans

DME Credit Facility

 

DMW Credit Facility

 

RHDI Credit Facility

 

SuperMedia Credit Facility

   Number: For each credit facility, creditors
holding more than 1/2 in number of the
allowed claims under such facility that are
held by creditors that vote on the plan

 

and

 

Amount: For each credit facility, creditors
holding at least 2/3 in amount of the allowed
claims under such facility that are held by
creditors that vote on the plan

Lenders holding more than half in number and at least 2/3 in amount of (but not all) claims under each of the Dex One credit facilities and the SuperMedia credit facility have become consenting lenders to the support agreements (as described below). As a result, the number and amount of Dex One credit facilities claims and SuperMedia credit facility claims held by lenders contractually obligated to support the Dex One prepackaged plan and the SuperMedia prepackaged plan, respectively, exceed the thresholds required for approval of such prepackaged plans by each class of Dex One credit facilities claims and SuperMedia credit facility claims respectively, under applicable bankruptcy law.

 

Q: What are the support agreements?

 

A: On December 5, 2012, each of Dex One and SuperMedia entered into a Support and Limited Waiver Agreement (the “support agreements”) with certain of their respective senior secured lenders. The support agreements set forth the obligations and commitments of the parties with respect to the transaction. Specifically, the lenders party to the support agreements (“consenting lenders”) have agreed to support the consummation of the mergers and financing amendments whether effectuated outside of court or through Chapter 11 cases. The support agreements provide for termination events if certain milestones are not achieved by certain dates. See “The Support Agreements.” Lenders holding more than half in number and at least 2/3 in amount of (but not all) claims under each of the Dex One credit facilities and the SuperMedia credit facility have become consenting lenders. As a result, the number and amount of Dex One credit facilities claims and SuperMedia credit facility claims held by lenders contractually obligated to support the Dex One prepackaged plan and the SuperMedia prepackaged plan, respectively, exceed the thresholds required for approval of such prepackaged plans by each class of Dex One credit facilities claims and SuperMedia credit facility claims, respectively, under applicable bankruptcy law. Additional consenting lenders may join the support agreements in the future. A copy of the form of the Dex One support agreement is attached as Appendix K to this document, and a copy of the form of the SuperMedia support agreement is attached as Appendix L to this document.

 

Q: Can the transaction be consummated if the financing amendments are not approved even if stockholders approve the transaction or, in the alternative, approve the prepackaged plans?

 

A:

No, if Dex One’s or SuperMedia’s senior secured creditors do not approve the financing amendments (including pursuant to the prepackaged plans), the transaction will not be consummated. Approval of the financing amendments out of court requires unanimous senior secured lender consent. Approval of the financing amendments through the prepackaged plans requires the affirmative vote of holders of a majority of the senior secured creditors, including holders of 2/3 of the aggregate principal amount, respectively, of

 

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  each of Dex One’s and SuperMedia’s debt that vote to “accept” or “reject” the prepackaged plans. Dex One and SuperMedia are soliciting the votes of their respective senior secured creditors on the financing amendments out of court as well as the prepackaged plans concurrently with this solicitation of stockholders.

 

Q: How does the Dex One board of directors recommend that the Dex One stockholders vote?

 

A: The Dex One board of directors has determined that the merger agreement and the transactions it contemplates are advisable and in the best interests of Dex One and its stockholders. Accordingly, the Dex One board of directors unanimously recommends that the Dex One stockholders vote “FOR” the proposal to approve and adopt the merger agreement and the transactions it contemplates, vote “FOR” the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid to Dex One’s named executive officers that is based on or otherwise relates to the transaction, vote “FOR” the proposal to approve the adjournment of the Dex One special meeting, if necessary or appropriate, to permit further solicitation of proxies and vote to “ACCEPT” the Dex One prepackaged plan.

 

Q: How does the SuperMedia board of directors recommend that the SuperMedia stockholders vote?

 

A: The SuperMedia board of directors has determined that the merger agreement and the transactions it contemplates are advisable and in the best interests of SuperMedia and its stockholders. Accordingly, the SuperMedia board of directors unanimously recommends that the SuperMedia stockholders vote “FOR” the proposal to approve and adopt the merger agreement and the transactions it contemplates, vote “FOR” the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid to SuperMedia’s named executive officers that is based on or otherwise relates to the transaction, vote “FOR” the proposal to approve the adjournment of the SuperMedia special meeting, if necessary or appropriate, to permit further solicitation of proxies and vote to “ACCEPT” the SuperMedia prepackaged plan.

 

Q: What will happen if I fail to vote or I abstain from voting?

 

A: If you are a Dex One or SuperMedia stockholder of record and fail to vote or abstain from voting on the proposal to approve and adopt the merger agreement and the transactions it contemplates, it will have the same effect as a vote against the proposal.

If you are a Dex One or SuperMedia stockholder of record and fail to vote or abstain from voting on either the Dex One golden parachute proposal or the SuperMedia golden parachute proposal, as applicable, your abstention from voting or failure of your broker, bank or other holder of record to vote will have no effect on the proposal.

In the event that at either the Dex One or SuperMedia special meeting there is an adjournment proposal properly brought before the meeting, if you are a stockholder of record and fail to vote or abstain from the effect of your abstention from voting or failure of your broker, bank or other holder of record to vote will depend on whether a quorum exists. If a quorum exists, the meeting may be adjourned by the affirmative vote of holders of at least a majority of the shares of Dex One common stock or SuperMedia common stock, as applicable, present in person or by proxy at the special meeting and voting on the proposal. Under such circumstances, a stockholder’s abstention from voting or the failure of a stockholder’s broker, bank or other holder of record to vote will have no effect on the proposal. If a quorum does not exist, an adjournment will require the affirmative vote of holders of at least a majority of the shares of Dex One or SuperMedia, as applicable, present in person or by proxy at the special meeting and entitled to vote on the proposal. Under such circumstances, a stockholders’ abstention from voting will have the same effect as a vote against the proposal, and the failure of a stockholder’s broker, bank or other holder of record to vote will have no effect on the proposal.

If you are a Dex One or SuperMedia stockholder of record and fail to vote or abstain from voting on the prepackaged plans, it will have the same effect as voting neither to accept nor to reject the prepackaged plans.

 

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Q: What will happen if I return my proxy and ballot without indicating how to vote?

 

A: Except with respect to the prepackaged plans, if you return your signed proxy and ballot without indicating how to vote on any particular proposal, the shares of Dex One or SuperMedia common stock represented by your proxy will be voted in accordance with management’s recommendation on that proposal.

If you return your proxy and ballot without indicating how you would like to vote on the Dex One prepackaged plan or the SuperMedia prepackaged plan, as applicable, the shares of Dex One or SuperMedia common stock represented by your ballot will not be voted either to accept or to reject the Dex One prepackaged plan or the SuperMedia prepackaged plan, as applicable.

 

Q: Can I change my vote after I have returned a proxy and ballot?

 

A: Yes. For the proposals that can be voted on by proxy, you can change your vote at any time before your proxy is voted at your respective special meeting. If you are a stockholder of record, you can do this in one of two ways:

 

   

you can send a signed notice of revocation or a new valid proxy; or

 

   

you can attend your special meeting and submit your proxy and ballot in person, which will automatically cancel any proxy previously given, but simply attending the special meeting without voting will not revoke any proxy that you have previously given or change your vote.

If you choose the first method, your notice of revocation or your new signed proxy must be received by the Corporate Secretary of Dex One or SuperMedia, as applicable, no later than the beginning of the applicable special meeting. If your shares are held in street name by your bank or broker, you should contact your broker to change your vote.

For the proposals regarding the prepackaged plans, you may, prior to the voting deadline, revoke or change a vote contained within your proxy and ballot. If you want to withdraw your vote and you do not want to submit another vote in its place, you must deliver a written notice of revocation or withdrawal to the voting agent prior to the voting deadline. To change your vote, you may submit a new proxy and ballot prior to the voting deadline and your previously submitted proxy and ballot will be revoked and superseded.

 

Q: When do you expect the transaction to be completed?

 

A: Dex One and SuperMedia hope to complete the transaction as soon as reasonably possible. The transaction is, however, subject to the satisfaction or waiver of conditions, and it is possible that factors outside the control of Dex One and SuperMedia could result in the transaction being completed at a later time or not at all. Consummating the transaction out of court is expected to require less time than consummating the transaction through Chapter 11 cases.

 

Q: Do I have dissenter’s rights or appraisal rights?

 

A: No. Under Delaware law, neither holders of Dex One common stock nor holders of SuperMedia common stock are entitled to appraisal rights in connection with the transaction, whether completed out of court or through Chapter 11 cases.

 

Q: What are the material U.S. federal income tax consequences of the transaction?

 

A: If the transaction is consummated, either out of court or through Chapter 11 cases, the Dex One merger will qualify as a “reorganization” within the meaning of Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the “Code”). Therefore, a holder or other beneficial owner of Dex One common stock will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of such person’s shares of Dex One common stock for shares of Dex Media common stock pursuant to the Dex One merger. Additionally, such a person will not recognize any gain or loss for U.S. federal income tax purposes on account of the implied reverse stock split of shares of Dex One common stock when they are exchanged for shares of Dex Media common stock pursuant to the Dex One merger.

 

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If the transaction is consummated, either out of court or through Chapter 11 cases, the parties intend that the SuperMedia merger also be treated as a reorganization, and provided that it so qualifies, a holder or other beneficial owner of SuperMedia common stock will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of such person’s shares of SuperMedia common stock for shares of Dex Media common stock pursuant to the SuperMedia merger. However, as discussed in more detail below in this document, it is possible that the SuperMedia merger would not be treated as a reorganization, as a result of which a holder or other beneficial owner of SuperMedia common stock would recognize gain or loss in the amount of the difference between the fair market value of the shares of Dex Media common stock received pursuant to the SuperMedia merger and such person’s adjusted tax basis in the shares of SuperMedia common stock exchanged therefor.

No opinion from legal counsel has been given regarding whether the Dex One or SuperMedia merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and neither Dex One nor SuperMedia have requested, nor do they intend to request, a ruling from the Internal Revenue Service regarding the U.S. federal income tax consequences of the transaction. You should read “Material United States Federal Income Tax Consequences of the Transaction” for a more complete discussion of the U.S. federal income tax consequences of the transaction. Tax matters can be complicated and the tax consequences of the transaction to you will depend on your particular tax situation. We urge you to consult your tax advisor to determine the tax consequences of the transaction to you.

 

Q: If I hold any physical stock certificates, should I send them in now?

 

A: Dex One Stockholders: No. Dex One shares are held in book-entry form. If the transaction is consummated out of court, after the transaction is completed, Dex Media’s exchange agent will send former Dex One stockholders a letter of transmittal explaining what they must do to exchange their shares of Dex One common stock into book-entry form for the transaction consideration payable to them. If the transaction is consummated through Chapter 11 cases, the Dex Media common stock will be distributed as set forth in the Dex One prepackaged plan. The shares of Dex Media common stock that Dex One stockholders receive in the transaction will be issued in book-entry form.

SuperMedia Stockholders: No. SuperMedia stockholders should keep any SuperMedia stock certificates they hold both now and after the transaction is completed. If the transaction is consummated out of court, after the transaction is completed, Dex Media’s exchange agent will send former SuperMedia stockholders a letter of transmittal explaining what they must do to exchange their shares of SuperMedia common stock into book-entry form in order to receive the transaction consideration payable to them. If the transaction is consummated through Chapter 11 cases, the Dex Media common stock will be distributed as set forth in the SuperMedia prepackaged plan. The shares of Dex Media common stock that SuperMedia stockholders receive in the transaction will be issued in book-entry form.

 

Q: What happens if I sell my shares of Dex One or SuperMedia common stock before the voting deadline?

 

A: The voting record date, which is also the record date for the Dex One special meeting and the SuperMedia special meeting, is earlier than the voting deadline, which is also the date of the Dex One special meeting and the SuperMedia special meeting, respectively. If you transfer your shares of Dex One common stock after the Dex One record date but before the Dex One special meeting, you will retain your right to vote on the proposals, unless you have transferred your shares with a proxy, but will have transferred the right to receive the merger consideration in the transaction. Similarly, if you transfer your shares of SuperMedia common stock after the SuperMedia record date but before the SuperMedia special meeting, you will retain your right to vote on the proposals, unless you have transferred your shares with a proxy, but will have transferred the right to receive the merger consideration in the transaction. In order to receive the merger consideration, you must hold your shares through the effective date of the transaction.

 

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Q: What if I hold shares of common stock in both Dex One and SuperMedia?

 

A: If you are both a Dex One stockholder and a SuperMedia stockholder, you will receive two separate packages of proxy materials. A vote cast as a Dex One stockholder will not count as a vote cast as a SuperMedia stockholder, and a vote cast as a SuperMedia stockholder will not count as a vote cast as a Dex One stockholder. Therefore, please submit a proxy and ballot for your shares of each of Dex One and SuperMedia common stock.

The Prepackaged Plans

 

Q: Why are Dex One and SuperMedia soliciting votes on the prepackaged plans if the transaction can be consummated out of court?

 

A:

Dex One and SuperMedia have prepared the prepackaged plans as an alternative method of consummating the transaction if the closing conditions contained in the merger agreement are not met or waived or Dex One and SuperMedia do not obtain majority stockholder approval of the transaction from their respective stockholders on an out of court basis. Dex One and SuperMedia may consummate the transaction through Chapter 11 cases if they receive the affirmative vote of a majority of their respective senior secured creditors, including the holders of 2/3 of the aggregate principal amount (counting only those that vote) of each of their respective senior secured credit facilities, that vote on the prepackaged plans and the Bankruptcy Court confirms the prepackaged plans. The Bankruptcy Code also permits the Bankruptcy Court to approve, and for Dex One and SuperMedia to consummate, the respective prepackaged plans even if 2/3 of each of Dex One’s and SuperMedia’s respective shareholders that cast votes do not vote to accept the respective prepackaged plan. If these “cram-down” provisions of the Bankruptcy Code are invoked, the approval of the stockholders to the prepackaged plan will not be required if the Bankruptcy Court confirms such plan. See “Risk Factors— Risks Related to the Prepackaged Plans and Other Bankruptcy Law Considerations”.

 

Q: How would the prepackaged plans be implemented?

 

A: The prepackaged plans consist of plans of reorganization under Chapter 11 of the Bankruptcy Code that, if confirmed by the Bankruptcy Court, would effect the transaction, including the financing amendments, as further described in “The Prepackaged Plans.”

 

Q: What vote is needed for the Bankruptcy Court to confirm the prepackaged plans?

 

A: For the prepackaged plans to be confirmed by the Bankruptcy Court without invoking the “cram-down” provisions of the Bankruptcy Code, each class of creditor claims against Dex One and SuperMedia (“Claims”) and each claim of stockholder interests in Dex One and SuperMedia (“Interests”) that is impaired must vote to accept the prepackaged plans. An impaired class of Claims is presumed to accept a plan of reorganization if the holders of at least 2/3 in amount and a majority in number of the Claims in such class who actually cast votes accept the plan. An impaired class of Interests is presumed to accept a plan of reorganization if the holders of at least 2/3 in amount of such class who actually cast votes accept the plan. If the prepackaged plans are confirmed by the Bankruptcy Court and become effective, the prepackaged plans will bind all holders of Claims against and Interests in Dex One or SuperMedia, as applicable, regardless of whether they voted to accept or reject the prepackaged plans and regardless of whether they voted at all on the prepackaged plans. As more fully discussed in the prepackaged plans, only secured creditors and stockholders are impaired classes. Neither the holders of the Dex One’s 12%/14% Senior Subordinated Notes due 2017 (the “Dex One senior subordinated notes”) nor any other classes are impaired under the prepackaged plans.

The confirmation and effectiveness of the prepackaged plans are subject to conditions that may not be satisfied. There can be no assurance that all requirements for confirmation and effectiveness of the

 

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prepackaged plans will be satisfied or that the Bankruptcy Court will conclude that the requirements for confirmation and effectiveness of the prepackaged plans have been satisfied. See “The Prepackaged Plans—The Dex One Prepackaged Plan—Confirmation of the Dex One Prepackaged Plan” and “The Prepackaged Plans—The SuperMedia Prepackaged Plan—Confirmation of the SuperMedia Prepackaged Plan.”

If either Dex One or SuperMedia does not receive the requisite acceptances from their respective senior secured creditors to allow the prepackaged plans to be confirmed under the Bankruptcy Code, the prepackaged plans will not be confirmed or become effective.

If the “cram-down” provisions of the Bankruptcy Code are invoked, the acceptance of the stockholders of the prepackaged plan will not be required if the Bankruptcy Court confirms such plan. See “Risk Factors— Risks Related to the Prepackaged Plans and Other Bankruptcy Law Considerations”.

Neither Dex One nor SuperMedia has at this time taken any action approving a bankruptcy filing, and, if the transaction is consummated outside of court, neither Dex One nor SuperMedia will commence a bankruptcy proceeding to consummate the respective prepackaged plan.

 

Q: When is the deadline for submitting your proxy and ballot to vote on the applicable prepackaged plan?

 

A: All proxy and ballots must be received by Epiq by March 13, 2013 by 1:30 p.m., prevailing Eastern Time, unless extended by Dex One and SuperMedia. If this voting deadline is extended, Dex One and SuperMedia will notify the tabulation agent and send a notice to stockholders and the senior secured creditors or issue a press release or other public announcement no later than 9:00 a.m., prevailing Eastern Time, on the next business day after the scheduled voting deadline. If either special meeting is adjourned, then the voting deadline for the company that adjourns its meeting will be automatically moved to the time that is 30 minutes after the special meeting is reconvened.

Answering Additional Questions

 

Q: Who can help answer my questions?

 

A: Dex One or SuperMedia stockholders who have questions about the transaction or the other proposals or who desire additional copies of this document or additional proxy and ballots should contact:

Epiq Systems

FDR Station, P.O. Box 5014

New York, New York, 10150-5014

(866) 734-9393 (telephone)

(646) 282-2501 (fax)

 

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SUMMARY

This summary highlights information contained elsewhere in this document. It may not contain all of the information that is important to you. We urge you to carefully read the entire document, including the appendices and the other documents to which we refer in order to fully understand the merger agreement and the related transactions. See “Where You Can Find More Information.” Each item in this summary refers to the first page of this document on which that subject is discussed in more detail.

The Transaction (See page 72)

The transaction being proposed is a stock-for-stock merger between Dex One and SuperMedia under the terms of a merger agreement that is described in this document. The transaction may be consummated either out of court or under the prepackaged plans through Chapter 11 cases. A copy of the merger agreement is attached as Appendix A to this document, a copy of the Dex One prepackaged plan is attached as Appendix F to this document, and a copy of the SuperMedia prepackaged plan is attached as Appendix G to this document. Dex One and SuperMedia encourage you to read the entire merger agreement carefully because it is the principal document governing the transaction. Dex One and SuperMedia also encourage you to read the prepackaged plans, because they will be the principal documents governing the transaction if the transaction is consummated through Chapter 11 cases.

Structure of the Transaction (See page 130)

Subject to the terms and conditions contained in the merger agreement and the prepackaged plans, if applicable, the transaction will comprise the following steps:

 

   

First, the Dex One merger will occur, in which Dex One will merge with and into its direct, wholly owned subsidiary, Newdex, with Newdex surviving the merger. After the Dex One merger, each share of common stock of Dex One will have been converted into 0.2 shares of common stock of Newdex (the Dex One Exchange Ratio) and holders of Dex One common stock will own 100% of the common stock of Newdex.

 

   

Second, immediately following the consummation of the Dex One merger, the SuperMedia merger will occur, in which Merger Sub, a direct wholly owned subsidiary of Newdex, will merge with and into SuperMedia, with SuperMedia surviving the merger as a direct wholly owned subsidiary of Newdex. After the SuperMedia merger with Merger Sub, each share of common stock of SuperMedia will have been converted into 0.4386 shares of common stock of Newdex (the SuperMedia Exchange Ratio), resulting in holders of SuperMedia common stock owning approximately 40% of the common stock of Newdex and former holders of Dex One common stock owning approximately 60% of the common stock of Newdex. In the event the transaction is consummated through Chapter 11 cases, the respective percentage of Newdex common stock held by SuperMedia common stockholders and Dex One common stockholders upon consummation of the transaction may be subject to adjustment if Dex One, with the consent of SuperMedia, exercises its option to issue and distribute Newdex common stock under the employee benefit plans designated by Dex Media. See the section titled “The Prepackaged Plans.”

 

   

As a result of the mergers, SuperMedia will be a direct wholly owned subsidiary of Newdex. Newdex will change its name to Dex Media, Inc. Prior to the consummation of the transaction, Dex Media will apply to list its common stock on either the New York Stock Exchange (“NYSE”) or the NASDAQ Stock Market (“NASDAQ”), subject to official notice of issuance.

Under the prepackaged plans, Dex One and SuperMedia will be able to take additional actions necessary or appropriate to effect the transaction.

 

 

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The following diagrams illustrate in simplified terms the current abbreviated corporate structures of Dex One and SuperMedia and the abbreviated corporate structure of Dex Media (and approximate ownership percentages and indebtedness outstanding as of December 31, 2012) following the consummation of the transaction:

 

LOGO

 

 

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LOGO

Consideration to Be Received in the Transaction; Ownership of Dex Media After the Transaction

Upon completion of the transaction, whether consummated out of court or in Chapter 11 cases: (a) Dex One stockholders will receive 0.2 shares of Dex Media common stock for each share of Dex One common stock that they own, which reflects a 1-for-5 reverse stock split of Dex One common stock and (b) SuperMedia stockholders will receive 0.4386 shares of Dex Media common stock for each share of SuperMedia common stock that they own. These exchange ratios are fixed and will not be adjusted based on changes in the market value of the common stock of SuperMedia or Dex One or based on other changes. Because of this, the implied dollar value of the consideration to SuperMedia stockholders will fluctuate with changes in the market price of a share of Dex One common stock. Based on the closing price of $1.24 of Dex One common stock on The New York Stock Exchange (“NYSE”) on August 20, 2012, the last trading day before public announcement of the transaction, the 0.4386 ratio represented $2.72 in value for each share of SuperMedia common stock, assuming the value of one Dex Media share would be equivalent to five Dex One shares, reflecting the 1-for-5 reverse stock split. Based on the closing price of $1.77 of Dex One common stock on the NYSE on February 6, 2013, the latest practicable date before the date of this document, the exchange ratio represented $3.88 in value for each share of SuperMedia common stock.

Treatment of Stock Awards (See page 131)

Dex One

The merger agreement specifies how equity compensation awards issued by Dex One prior to completion of the transaction will be treated in the transaction. Upon completion of the transaction:

 

   

each outstanding option issued by Dex One to acquire Dex One common stock, whether vested or unvested, will (1) if the closing price of Dex One common stock on the NYSE on the day before the closing date is less than or equal to the exercise price for such option to acquire Dex One common stock, be cancelled for no value; and (2) if the closing price of Dex One common stock on the NYSE on the day before the closing date is more than the exercise price for such option to acquire Dex One common stock, be converted into a fully vested option to purchase a number of shares of Dex Media common stock equal

 

 

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to the number of shares of Dex One common stock subject to such option multiplied by 0.2, and the per share exercise price for Dex Media common stock issuable upon such converted option will be equal to the exercise price of such converted option divided by 0.2 and rounded up to the nearest whole cent;

 

   

each restricted share of Dex One common stock will be converted into a number of shares of Dex Media common stock equal to the number of restricted shares multiplied by 0.2;

 

   

each restricted stock unit denominated in shares of Dex One common stock that is unsettled immediately prior to the effective time will become vested and converted into the right to receive a number of shares of Dex Media common stock equal to the “target” number of stock units set forth in the applicable restricted stock unit award agreement multiplied by 0.2; and

 

   

each stock appreciation right in respect of Dex One common stock that is unsettled immediately prior to the completion of the transaction will be cancelled and will only entitle its holder to receive a number of shares of Dex Media common stock equal to (1) the excess, if any, of the closing price of Dex One common stock on the NYSE on the day before the closing date over the base price (as defined in the applicable Dex One stock appreciation right agreement), divided by (2) the closing price of Dex One common stock on the NYSE on the day before the closing date, multiplied by (3) the number of shares of Dex One common stock subject to such Dex One stock appreciation right immediately prior to the completion of the transaction, multiplied by (4) 0.2.

SuperMedia

The merger agreement specifies how equity compensation awards issued by SuperMedia prior to completion of the transaction will be treated in the transaction. Upon completion of the transaction:

 

   

each outstanding option issued by SuperMedia to acquire SuperMedia common stock will be cancelled and each holder of such options will be paid in cash an amount equal to (1) the excess, if any, of the closing sale price on the day before the closing date of a share of SuperMedia common stock over the exercise price of such outstanding option multiplied by (2) the number of shares of SuperMedia common stock subject to such options;

 

   

each restricted share of SuperMedia common stock will be converted into a number of shares of Dex Media common stock equal to the number of shares of SuperMedia common stock underlying such restricted share multiplied by 0.4386; and

 

   

each restricted stock unit denominated in shares of SuperMedia common stock that is unsettled immediately prior to the effective time will be settled in accordance with the terms of the applicable SuperMedia stock plan and award agreement under which it was granted. To the extent such restricted stock units are settled in SuperMedia common stock, such SuperMedia common stock will receive Dex Media common stock in connection with the transaction in the same manner as all other shares of SuperMedia common stock.

Pursuant to the terms of the merger agreement, all outstanding options to acquire SuperMedia common stock not exercised by immediately prior to the effective time will be cancelled. Immediately prior to the effective time, all SuperMedia restricted stock units will vest and be settled in SuperMedia common stock.

Material United States Federal Income Tax Consequences of the Transaction (See page 211)

If the transaction is consummated, either out of court or through Chapter 11 cases, the Dex One merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Therefore, a holder or other beneficial owner of Dex One common stock will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of such person’s shares of Dex One common stock for shares of Dex Media

 

 

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common stock pursuant to the Dex One merger. Additionally, such a person will not recognize any gain or loss for U.S. federal income tax purposes on account of the implied reverse stock split of shares of Dex One common stock when they are exchanged for shares of Dex Media common stock pursuant to the Dex One merger.

If the transaction is consummated, either out of court or through Chapter 11 cases, the parties intend that the SuperMedia merger also be treated as a reorganization, and provided that it so qualifies, a holder or other beneficial owner of SuperMedia common stock will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of such person’s shares of SuperMedia common stock for shares of Dex Media common stock pursuant to the SuperMedia merger. However, as discussed in more detail below, it is possible that the SuperMedia merger would not be treated as a reorganization, as a result of which a holder or other beneficial owner of SuperMedia common stock would recognize gain or loss in the amount of the difference between the fair market value of the shares of Dex Media common stock received pursuant to the SuperMedia merger and such person’s adjusted tax basis in the shares of SuperMedia common stock exchanged therefor.

No opinion from legal counsel has been given regarding whether the Dex One or SuperMedia merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and neither Dex One nor SuperMedia have requested, nor do they intend to request, a ruling from the Internal Revenue Service regarding the U.S. federal income tax consequences of the transaction. As a result, there can be no assurance that the Internal Revenue Service will not assert, or that a court would not sustain, a position contrary to the parties intended treatment of the SuperMedia merger. SuperMedia stockholders should consult their own tax advisers regarding the possible treatment of the merger as a fully taxable transaction.

Recommendation of the Board of Directors of Dex One (See page 87)

After careful consideration, the Dex One board of directors has approved and adopted the merger agreement and the transactions it contemplates. In addition, the Dex One board of directors has determined that the merger agreement and the transactions it contemplates are advisable and in the best interests of Dex One and its stockholders. For more information regarding the factors considered by the Dex One board of directors in reaching its decisions relating to its recommendations, see the section entitled “Proposal 1: The Transaction – Dex One’s Reasons for the Transaction; Recommendation of the Dex One Board of Directors.” The Dex One board of directors unanimously recommends that the Dex One stockholders vote “FOR” the proposal to approve and adopt the merger agreement and the transactions it contemplates, vote “FOR” the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid to Dex One’s named executive officers that is based on or otherwise relates to the transaction, vote “FOR” the proposal to approve the adjournment of the Dex One special meeting, if necessary or appropriate, to permit further solicitation of proxies and vote to “ACCEPT” the Dex One prepackaged plan.

Dex One has not at this time taken any action approving a bankruptcy filing, and, if the transaction is consummated outside of court, Dex One will not commence a bankruptcy proceeding to consummate the prepackaged plan.

Recommendation of the Board of Directors of SuperMedia (See page 90)

After careful consideration, the SuperMedia board of directors has approved and adopted the merger agreement and the transactions it contemplates. In addition, the SuperMedia board of directors has determined that the merger agreement and the transactions it contemplates are advisable and in the best interests of SuperMedia and its stockholders. For more information regarding the factors considered by the SuperMedia board of directors in reaching its decisions relating to its recommendations, see the section entitled “Proposal 1: The Transaction – SuperMedia’s Reasons for the Transaction; Recommendation of the SuperMedia Board of Directors.” The SuperMedia board of directors unanimously recommends that the SuperMedia

 

 

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stockholders vote “FOR” the proposal to approve and adopt the merger agreement and the transactions it contemplates, vote “FOR” the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid to SuperMedia’s named executive officers that is based on or otherwise relates to the transaction, vote “FOR” the proposal to approve the adjournment of the SuperMedia special meeting, if necessary or appropriate, to permit further solicitation of proxies and vote to “ACCEPT” the SuperMedia prepackaged plan.

SuperMedia has not at this time taken any action approving a bankruptcy filing, and, if the transaction is consummated outside of court, SuperMedia will not commence a bankruptcy proceeding to consummate the prepackaged plan.

Opinions of Financial Advisors

Dex One (See page 93)

Houlihan Lokey Capital, Inc.

On December 5, 2012 Houlihan Lokey Capital, Inc. (“Houlihan Lokey”) rendered an oral opinion to the Dex One board of directors (which was confirmed in writing by delivery of Houlihan Lokey’s written opinion dated December 5, 2012) to the effect that, as of December 5, 2012, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken, as set forth in the written opinion, and other matters considered by Houlihan Lokey in preparing its opinion, the exchange ratio was fair, from a financial point of view, to holders of Dex One common stock.

Houlihan Lokey’s opinion was directed to the Dex One board of directors and only addressed the fairness from a financial point of view of the exchange ratio and does not address any other aspect or implication of the merger agreement or the transactions it contemplates. The summary of Houlihan Lokey’s opinion in this document is qualified in its entirety by reference to the full text of its written opinion, which is included as Appendix D to this document and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in preparing its opinion. However, neither Houlihan Lokey’s opinion nor the summary of its opinion and the related analyses set forth in this document are intended to be, and do not constitute, advice or a recommendation to the Dex One board of directors or any stockholder as to how to act or vote with respect to the mergers or related matters. See “Proposal 1: The Transaction – Opinion of Dex One’s Financial Advisor.”

Houlihan Lokey’s opinion did not address the prepackaged plans, and Houlihan Lokey did not express any opinion or recommendation as to any other terms of the prepackaged plans or the aggregate terms of the prepackaged plans, or any other plan of reorganization under the Bankruptcy Code.

SuperMedia (See page 102)

Morgan Stanley & Co. LLC

At the meeting of the board of directors of SuperMedia on December 5, 2012, Morgan Stanley & Co. LLC (“Morgan Stanley”) rendered its oral and written opinion to the board of directors of SuperMedia that as of such date, and based upon and subject to the various assumptions, considerations, qualifications and limitations set forth in its written opinion, the SuperMedia Exchange Ratio was fair from a financial point of view to the holders of shares of SuperMedia common stock (other than shares owned by Dex One, Newdex, SuperMedia or any of their respective subsidiaries, referred to as the “excluded shares”).

 

 

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The full text of the written opinion of Morgan Stanley, dated as of December 5, 2012, is attached hereto as Appendix E and is incorporated into this document by reference. The opinion sets forth, among other things, assumptions made, procedures followed, matters considered and qualifications to and limitations of the review undertaken by Morgan Stanley in rendering its opinion. Holders of SuperMedia common stock are urged to, and should, read the opinion carefully and in its entirety. Morgan Stanley’s opinion is directed to the board of directors of SuperMedia, in its capacity as such, and addresses only the fairness, from a financial point of view to the holders of shares of SuperMedia common stock (other than the excluded shares), of the SuperMedia Exchange Ratio pursuant to the merger agreement as of the date of the opinion. Morgan Stanley’s opinion does not address any other term or aspect of the mergers or any related transactions (including the amendment of SuperMedia’s and Dex One’s credit facilities, the tax sharing agreement and the shared services agreement). Morgan Stanley’s opinion does not in any manner address (1) the fairness of the amount or nature of the compensation to any of the officers, directors or employees of any of the parties to the merger agreement, or any class of such persons, relative to the consideration to be received by the holders of shares of SuperMedia common stock in the transaction, (2) the solvency, creditworthiness or fair value of SuperMedia, Dex One or Dex Media under any applicable laws relating to bankruptcy, insolvency, fraudulent conveyance or similar matters, (3) the absolute or relative recoveries available to the holders of SuperMedia common stock or the holders of any other class of securities, creditors or other constituencies of SuperMedia or Dex One in any bankruptcy or other insolvency proceeding, liquidation or restructuring, (4) any plan of reorganization under the Bankruptcy Code, including the prepackaged plans, (5) the underlying business decision to proceed with or effect the mergers, the amendment of SuperMedia’s and Dex One’s credit facilities, the tax sharing agreement, the shared services agreement or any plan of reorganization under the Bankruptcy Code, including the prepackaged plans, (6) the availability or advisability of any alternatives, or (7) how any stockholder of SuperMedia or Dex One should vote at any stockholders meeting held in connection with the transaction or any other matter or how any other constituency should vote in connection with the prepackaged plans, if applicable.

Interests of Certain Persons in the Transaction (See page 118)

Dex One

Dex One’s executive officers and directors have interests in the transaction as individuals that are different from, or in addition to, the interests of Dex One’s stockholders generally. The Dex One board of directors was aware of these interests and considered them, among other matters, in approving and adopting the merger agreement and the transactions it contemplates. These interests include (1) the appointment of five current directors of Dex One as directors of Dex Media upon completion of the transaction, (2) all stock options, restricted stock, restricted stock units denominated in shares of Dex One common stock and stock appreciation rights in respect of Dex One common stock will each be settled upon the completion of the transaction as described in the section entitled “The Merger Agreement—Treatment of Stock Awards—Dex One,” and (3) existing employment agreements and other arrangements between Dex One and certain executive officers that provide for severance and other benefits in connection with a qualifying termination of employment following a change of control. The Dex One board of directors has deemed that the transaction will constitute a change in control for purposes of those arrangements.

As of December 31, 2012, Dex One executive officers as a group held stock options to acquire 2,218,750 shares of Dex One common stock (with a weighted average exercise price of $11.17), 457,767 shares of Dex One restricted stock, 325,000 restricted stock units in respect of Dex One common stock and 81,576 stock appreciation rights in respect of Dex One common stock, and Dex One’s non-employee directors as a group held no stock options to acquire shares of Dex One common stock, no shares of Dex One restricted stock, no restricted stock units in respect of Dex One common stock and no stock appreciation rights in respect of Dex One common stock. Dex One’s executive officers and directors also have rights to indemnification and directors’ and officers’ liability insurance that will survive completion of the transaction. See “Proposal 1: The Transaction— Interests of Certain Persons in the Transaction—Dex One” for additional information.

 

 

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SuperMedia

SuperMedia’s executive officers and directors have interests in the transaction as individuals that are different from, or in addition to, the interests of SuperMedia’s stockholders generally. The SuperMedia board of directors was aware of these interests and considered them, among other matters, in approving and adopting the merger agreement and the transactions it contemplates. These interests include (1) the appointment of Peter McDonald, the current President and Chief Executive Officer of SuperMedia, and Samuel D. Jones, the current Executive Vice President, Chief Financial Officer and Treasurer of SuperMedia, as the Chief Executive Officer and President and the Chief Financial Officer of Dex Media, respectively, upon completion of the transaction as described in the section entitled “Proposal 1: The Transaction—Board of Directors and Management of Dex Media following Completion of the Transaction,” (2) the appointment of five current directors of SuperMedia (including Mr. McDonald) as directors of Dex Media upon completion of the transaction, (3) the settlement of stock options, restricted stock and restricted stock units denominated in shares of SuperMedia common stock will each be settled upon the completion of the transaction as described in the section entitled “The Merger Agreement—Treatment of Stock Awards—SuperMedia,” (4) existing employment agreements and other arrangements between SuperMedia and certain executive officers that provide for severance and other benefits in connection with a qualifying termination of employment following a change of control such as the transaction, (5) one of SuperMedia’s directors, John Slater, is employed by a significant holder of common stock and senior indebtedness of SuperMedia and Dex One and the consummation of the transaction may be a material factor in determining discretionary compensation he may be paid by his employer and (6) Mr. Slater served as a member of the unofficial steering committee of SuperMedia’s secured lenders that negotiated the terms of the financing amendments. The SuperMedia board of directors has deemed that the transaction will constitute a change in control for purposes of these arrangements.

As of January 25, 2013, SuperMedia executive officers as a group held stock options to acquire 253,500 shares of SuperMedia common stock (with a weighted average exercise price of $7.89), 306,300 shares of SuperMedia restricted stock, and 57,014 restricted stock units in respect of SuperMedia common stock, and SuperMedia’s non-employee directors as a group held 88,842 shares of SuperMedia restricted stock and 9,459 restricted stock units in respect of SuperMedia common stock. SuperMedia’s executive officers and directors also have rights to indemnification and directors’ and officers’ liability insurance that will survive completion of the transaction. See “Proposal 1: The Transaction— Interests of Certain Persons in the Transaction—SuperMedia” for additional information.

Board of Directors of Dex Media Following Completion of the Transaction (See page 117)

Upon completion of the transaction, whether consummated out of court or through Chapter 11 cases, the board of directors of Dex Media will consist of ten members comprising:

 

   

the five current Dex One non-employee directors, including Alan F. Schultz as chairman of the board of Dex Media;

 

   

four current SuperMedia non-employee directors designated by SuperMedia; and

 

   

Mr. McDonald, who will be the Chief Executive Officer of Dex Media.

Regulatory Approvals Required for the Transaction (See page 118)

Currently, no filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), is believed to be necessary for the transaction to be completed. Depending upon fluctuations in the fair market value of SuperMedia’s common stock prior to the closing of the transaction, however, it may be necessary for the parties to make the requisite filings and wait the applicable waiting periods under the HSR Act.

 

 

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Conditions That Must Be Satisfied or Waived for the Transaction to Occur (See page 141)

Whether or when the transaction will be completed depends on a number of conditions being satisfied or, where legally permissible, waived. These conditions include, among others:

 

   

in the out of court transaction, obtaining the separate approvals of the merger agreement and the transactions it contemplates from a majority of the Dex One stockholders and the SuperMedia stockholders or, in the Chapter 11 alternative, obtaining acceptances of at least 2/3 of each of the Dex One and SuperMedia stockholders voting with respect to the Dex One prepackaged plan and the SuperMedia prepackaged plan, respectively;

 

   

the approval of the listing of Dex Media common stock to be issued in the transaction on either the NYSE or NASDAQ, subject to official notice of issuance;

 

   

in the out of court transaction, the receipt of all necessary consents of Dex One’s senior secured creditors to the transaction and the execution of each of Dex One’s required financing amendments by senior secured creditors holding 100% of Dex One’s senior secured debt or, in the prepackaged Chapter 11 alternative, with respect to each of Dex One’s senior secured credit facilities, the receipt of acceptances of at least 2/3 of Dex One’s senior secured creditors in amount and a majority in number of the senior secured creditors who actually vote to accept or reject the Dex One prepackaged plan;

 

   

in the out of court transaction, the receipt of all necessary consents of SuperMedia’s senior secured creditors to the transaction and the execution of each of SuperMedia’s required financing amendments by senior secured creditors holding 100% of SuperMedia’s senior secured debt or, in the prepackaged Chapter 11 alternative, the receipt of acceptances of at least 2/3 of SuperMedia’s senior secured creditors in amount and a majority in number of the senior secured creditors who actually vote to accept or reject the SuperMedia prepackaged plan;

 

   

obtaining required governmental and regulatory approvals;

 

   

the effectiveness of the Form S-4 and the absence of a stop order suspending such effectiveness or of proceedings for that purpose initiated or threatened by the SEC;

 

   

if the transaction is consummated through prepackaged Chapter 11 cases, Bankruptcy Court approval and effectiveness of the prepackaged plans;

 

   

the absence of any legal prohibition on consummation of the transaction;

 

   

the absence of a material adverse change in Dex One or SuperMedia, respectively;

 

   

no required governmental and regulatory approvals result in the imposition of conditions that would reasonably be expected to have a material adverse effect on either Dex One or SuperMedia, or on Dex Media upon completion of the transaction;

 

   

the accuracy of the representations and warranties of the parties to the merger agreement (subject to the materiality standards set forth in the merger agreement);

 

   

the execution of a tax sharing agreement and a shared services agreement by Dex One, SuperMedia and certain of their subsidiaries; and

 

   

material performance of all the covenants of the parties to the merger agreement.

Several of the conditions to the obligations of the parties to close the transaction are beyond our control and we cannot be certain when, or if, the conditions to the transaction will be satisfied or waived.

 

 

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Termination of the Merger Agreement (See page 143)

Dex One and SuperMedia may agree to terminate the merger agreement without completing the transaction, even after stockholder approval, if the termination is approved by each of our boards of directors.

In addition, the merger agreement may be terminated by either party in the following circumstances:

 

   

if a governmental entity has issued a final and nonappealable order permanently enjoining or prohibiting the transaction;

 

   

if the transaction has not been completed on or before June 30, 2013, unless the failure to complete the transaction by that date is due to a breach of the merger agreement by the party seeking to terminate the agreement;

 

   

if there is a breach of the agreement by the other party (or, in the case of Dex One, a breach of the agreement by Dex Media or Merger Sub) that would cause the closing conditions described above not to be satisfied, unless the breach is capable of being, and is, cured within 30 days of notice of the breach and provided that the terminating party is not itself in breach such that the closing conditions would not be satisfied;

 

   

if the other party fails to recommend the approval of the transaction to its stockholders, modifies its recommendation in a manner adverse to the terminating party or recommends (or fails to recommend against) an alternative transaction;

 

   

if either party fails to obtain sufficient stockholder votes to allow the transaction to be consummated out of court and fails to obtain sufficient stockholder votes for the stockholders to be deemed to have accepted such party’s prepackaged plan;

 

   

if either party fails to obtain sufficient stockholder votes for the stockholders to be deemed to have accepted such party’s prepackaged plan, when such party’s creditors have not unanimously approved the applicable financing amendments;

 

   

if either party’s board of directors determines in good faith that the amendment and extension of Dex One or SuperMedia’s credit facilities will not be achieved prior to the outside date of the transaction in such a way that is satisfactory to both Dex One and SuperMedia; or

 

   

if either party’s board of directors determines in good faith that, if the transaction is to be consummated through Chapter 11 cases, either the Dex One prepackaged plan or the SuperMedia prepackaged plan will not become effective prior to the outside date of the transaction.

Expenses and Expense Reimbursement (See pages 141 and 144, respectively)

Generally, all fees and expenses incurred in connection with the merger agreement and the transactions contemplated by the merger agreement will be paid by the party incurring those expenses, subject to the specific exceptions discussed in this document. Upon termination of the merger agreement under specified circumstances, Dex One or SuperMedia may be required to pay the other party an expense reimbursement of up to a maximum amount of $7.5 million. See “The Merger Agreement—Expense Reimbursement” for a complete discussion of the circumstances under which a party may be required to pay an expense reimbursement.

The Rights of Dex One and SuperMedia Stockholders Will Be Governed by Dex Media’s Governing Documents after the Transaction (See page 217)

The rights of Dex One and SuperMedia stockholders will change as a result of the transaction. The legal rights of current Dex One and SuperMedia stockholders will, following completion of the transaction, be

 

 

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governed by the Dex Media certificate of incorporation and the Dex Media bylaws. This document contains a description of the material differences in stockholder rights. See “Comparison of Rights of Dex One and SuperMedia Stockholders.”

No Appraisal Rights (See page 117)

Under Delaware law, neither holders of Dex One common stock nor holders of SuperMedia common stock are entitled to appraisal rights in connection with the transaction, whether consummated out of court or through Chapter 11 cases.

Comparative Market Prices and Share Information (See page 230)

Dex One common stock is quoted on the New York Stock Exchange under the symbol “DEXO.” SuperMedia common stock is quoted on NASDAQ under the symbol “SPMD.” The following table shows the closing sale prices of Dex One common stock and SuperMedia common stock as reported on the NYSE or NASDAQ, respectively, on August 20, 2012, the last trading day before we announced the transaction, and on February 6, 2013, the last practicable trading day before the distribution of this document. This table also shows the implied value of the transaction consideration proposed for each share of Dex One common stock and SuperMedia common stock.

 

     Dex One
Common
Stock
     SuperMedia
Common
Stock
     Implied Value of
One Share of
Dex One
Common

Stock(1)
     Implied Value of
One Share of
SuperMedia
Common

Stock(2)
 

At August 20, 2012

   $ 1.24       $ 2.58       $ 1.24       $ 2.72   

At February 6, 2013

     1.77         3.91         1.77         3.88   

 

(1) As a result of the Dex One merger, for each share of Dex One common stock, each Dex One stockholder will receive one-fifth of a share of Dex Media common stock. Consequently, the implied value of a share of Dex Media common stock for any given day is calculated as five times the closing price of Dex One common stock on such day ($6.20 at August 20, 2012 and $8.85 at February 6, 2013, which reflects a 1-for-5 reverse stock split of Dex One common stock). While the implied value of a share of Dex Media is five times the implied value of a share of Dex One common stock, Dex One stockholders will receive one-fifth of a share of Dex Media common stock, so it is estimated that the mergers will have no economic effect on a holder of Dex One common stock.
(2) Calculated by multiplying the implied value of Dex Media common stock ($6.20 at August 20, 2012 and $8.85 at February 6, 2013) by 0.4386 (the exchange ratio for SuperMedia common stock).

The market price of Dex One common stock and SuperMedia common stock will fluctuate prior to the special meetings and before the transaction is completed. You should obtain current market quotations for the shares.

Tax Sharing Agreement (See page 145)

Concurrently with the completion of the transaction, (1) Dex One Service LLC and SuperMedia and its subsidiaries will enter into a Tax Sharing Agreement (the “SuperMedia Tax Sharing Agreement”) that will govern the respective rights, responsibilities and obligations of SuperMedia and its subsidiaries after the transaction with respect to tax liabilities and benefits, tax attributes, tax contests and other tax matters regarding income taxes, other taxes and related tax returns and (2) Dex One and its subsidiaries will enter into an amended and restated tax sharing agreement (the “Dex A&R Tax Sharing Agreement”) to reflect items and provisions reflected in the SuperMedia Tax Sharing Agreement.

 

 

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Shared Services Agreement (See page 146)

Concurrently with the completion of the transaction, Dex One and its subsidiaries and SuperMedia and its subsidiaries will enter into an Amended and Restated Shared Services Agreement (the “Shared Services Agreement”). Pursuant to the terms of the Shared Services Agreement, Dex One Service LLC, a wholly owned subsidiary of Dex One, and SuperMedia LLC, a wholly-owned subsidiary of SuperMedia, will provide certain specified services or pay for certain services provided by other entities, to Dex Media and all of its direct and indirect subsidiaries. Dex One Service LLC will allocate costs between the Dex One entities and the SuperMedia entities based on the relative proportions of prior year net revenues. It is expected that once the integration of SuperMedia and Dex One is complete, SuperMedia LLC will no longer be a provider of services to Dex Media and its subsidiaries.

Description of Certain Indebtedness (See page 202)

Among the conditions that must be met prior to the consummation of the transaction out of court is the receipt of necessary consents of Dex One’s and SuperMedia’s senior secured creditors to the transaction and the execution of financing amendments by senior secured creditors holding 100% of the indebtedness under each of the three separate credit facilities of three of Dex One’s wholly owned subsidiaries as borrowers and by senior secured creditors holding 100% of the indebtedness under SuperMedia’s credit facility. If the transaction is consummated under the prepackaged plans through Chapter 11 cases, Dex One and SuperMedia must receive acceptances of at least 2/3 of their respective senior secured creditors in amount and a majority in number of the senior secured creditors who actually vote to accept or reject the Dex One prepackaged plan or the SuperMedia prepackaged plan, respectively.

Term sheets setting forth the terms of the proposed financing amendments are attached to the merger agreement and the proposed amendments are attached to the prepackaged plans. Tables summarizing certain key terms of the proposed financing amendments follow (reference to the actual credit agreement should be made for actual terms and computations of the calculations set forth below):

DME Credit Facility

 

Key Term

 

Current Credit Facility

 

Amended and Restated Credit Facility

Maturity Date

  October 24, 2014   December 31, 2016

Interest Rate Spreads

 

ABR Loans

 

The highest of (1) the prime rate, (2) the federal funds effective rate plus 0.50% and (3) one month Adjusted LIBO Rate (as defined under the applicable credit agreement) plus 1.00%, in each case as in effect on such day plus an interest rate margin for base rate loans. The interest rate margin for base rate loans is (a) 1.50% per annum if the leverage ratio is greater than or equal to 2.75x; (b) 1.25% per annum if the leverage ratio is greater than or equal to 2.50x but less than 2.75x and (c) 1.00% per annum if the leverage ratio is less than 2.50x.

 

Eurodollar Loans

 

Adjusted LIBO Rate plus an interest rate margin for Eurodollar loans. The interest rate margin for Eurodollar loans is (a) 2.50% per

 

ABR Loans

 

The highest (subject to a floor of 4.00%) of (1) the prime rate, (2) the federal funds effective rate plus 0.50% and (3) one month Adjusted LIBO Rate plus 1.00%, in each case as in effect on such day plus an interest rate margin for base rate loans. The interest rate margin for base rate loans will be 2.00% per annum.

 

Eurodollar Loans

 

The higher of (1) Adjusted LIBO Rate and (2) 3.00%, in each case plus an interest rate margin for Eurodollar loans. The interest rate margin for Eurodollar loans will be 3.00% per annum. DME will be able to elect interest periods of one, two, three or six months for Eurodollar borrowings.

 

 

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Key Term

 

Current Credit Facility

 

Amended and Restated Credit Facility

  annum if the leverage ratio is greater than or equal to 2.75x; (b) 2.25% per annum if the leverage ratio is greater than or equal to 2.50x but less than 2.75x and (c) 2.00% per annum if the leverage ratio is less than 2.50x. DME may elect interest periods of one, two, three or six months for Eurodollar borrowings.  

Amortization

  Quarterly amortization payments of $29,119,073 with remaining outstanding amounts due at maturity.  

Quarterly amortization payments of

(1) $16,250,000 for each fiscal quarter in fiscal 2013,

(2) $13,750,000 for each fiscal quarter in fiscal 2014 and

(3) $11,250,000 for each fiscal quarter in fiscal 2015 and 2016, with all remaining outstanding amounts due at maturity.

Leverage Ratio

  Requires a ratio at the end of each fiscal quarter not to exceed 5.00x.  

Requires a ratio at the end of each fiscal quarter below not exceeding the ratio set forth below opposite such fiscal quarter:

 

Fiscal Quarter    Leverage Ratio

1Q 2013                  5.00x

2Q 2013                  5.00x

3Q 2013                  5.00x

4Q 2013                  5.00x

1Q 2014                  4.9375x

2Q 2014                  4.875x

3Q 2014                  4.8125x

4Q 2014                  4.75x

1Q 2015                  4.6875x

2Q 2015                  4.625x

3Q 2015                  4.5625x

4Q 2015                  4.50x

1Q 2016                  4.375x

2Q 2016                  4.25x

3Q 2016                  4.125x

4Q 2016                  4.00x

Interest Coverage Ratio

  None   Not less than 1.1 to 1.0 at the end of each fiscal quarter.

DMW Credit Facility

 

Key Term

 

Current Credit Facility

 

Amended and Restated Credit Facility

Maturity Date

  October 24, 2014   December 31, 2016

Interest Rate Spreads

 

ABR Loans

 

The highest (subject to a floor of 4.00%) of (1) the prime rate, (2) the federal funds effective rate plus 0.50%, (3) one month Adjusted LIBO Rate plus 1.00% and (4) 4.00%, in each case as in effect on such day plus an interest rate margin for base rate loans. The interest rate margin for base rate loans is (a) 3.50% per annum if the leverage ratio is greater than or equal to 2.75x; (b)

 

ABR Loans

 

The highest (subject to a floor of 4.00%) of (1) the prime rate, (2) the federal funds effective rate plus 0.50% and (3) one month Adjusted LIBO Rate plus 1.00%, in each case as in effect on such day plus an interest rate margin for base rate loans. The interest rate margin for base rate loans will be 4.00% per annum.

 

 

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Key Term

 

Current Credit Facility

 

Amended and Restated Credit Facility

 

3.25% per annum if the leverage ratio is greater than or equal to 2.50x but less than 2.75x and (c) 3.00% per annum if the leverage ratio is less than 2.50x.

 

Eurodollar Loans

 

The higher of (1) Adjusted LIBO Rate and (2) 3.00%, in each case plus an interest rate margin for Eurodollar loans. The interest rate margin for Eurodollar loans is (a) 4.50% per annum if the leverage ratio is greater than or equal to 2.75x; (b) 4.25% per annum if the leverage ratio is greater than or equal to 2.50x but less than 2.75x and (c) 4.00% per annum if the leverage ratio is less than 2.50x. DMW may elect interest periods of one, two, three or six months for Eurodollar borrowings.

 

Eurodollar Loans

 

The higher of (1) Adjusted LIBO Rate and (2) 3.00%, in each case plus an interest rate margin for Eurodollar loans. The interest rate margin for Eurodollar loans will be 5.00% per annum. DMW may elect interest periods of one, two, three or six months for Eurodollar borrowings.

Amortization

  Quarterly amortization payments of $4,647,054 with remaining outstanding amounts due at maturity.   Quarterly amortization payments of $11,250,000 for each fiscal quarter in fiscal 2013 through fiscal 2016, with all remaining outstanding amounts due at maturity on December 31, 2016.

Leverage Ratio

  Requires a ratio at the end of each fiscal quarter not to exceed 5.25x.  

Requires a ratio at the end of each fiscal quarter below not exceeding the ratio set forth below opposite such fiscal quarter:

 

Fiscal Quarter      Leverage Ratio

1Q 2013                      3.50x

2Q 2013                      3.50x

3Q 2013                      3.50x

4Q 2013                      3.50x

1Q 2014                      3.50x

2Q 2014                      3.42x

3Q 2014                      3.34x

4Q 2014                      3.25x

1Q 2015                      3.1875x

2Q 2015                      3.125x

3Q 2015                      3.0625x

4Q 2015                      3.00x

1Q 2016                      2.875x

2Q 2016                      2.75x

3Q 2016                      2.625x

4Q 2016                      2.5x

Interest Coverage Ratio

  Not less than 1.35 to 1.0 at the end of each fiscal quarter.   Not less than 2.0 to 1.0 at the end of each fiscal quarter.

 

 

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RHDI Credit Facility

 

Key Term

 

Current Credit Facility

 

Amended and Restated Credit Facility

Maturity Date

  October 24, 2014   December 31, 2016

Interest Rate Spreads

 

ABR Loans

 

The highest (subject to a floor of 4.00%) of (1) the prime rate, (2) the federal funds effective rate plus 0.50%, (3) one month Adjusted LIBO Rate plus 1.00% and (4) 4.00%, in each case as in effect on such day plus an interest rate margin for base rate loans. The interest rate margin for base rate loans is (a) 5.25% per annum if the leverage ratio is greater than or equal to 4.25x or (b) 5.00% per annum if the leverage ratio is less than 4.25x.

Eurodollar Loans

 

 

The higher of (1) Adjusted LIBO Rate and (2) 3.00%, in each case plus an interest rate margin for Eurodollar loans. The interest rate margin for Eurodollar loans is (a) 6.25% per annum if the leverage ratio is greater than or equal to 4.25x or (b) 6.00% per annum if the leverage ratio is less than 4.25x. RHDI may elect interest periods of one, two, three or six months for Eurodollar borrowings.

 

ABR Loans

 

The highest (subject to a floor of 4.00%) of (1) the prime rate, (2) the federal funds effective rate plus 0.50%, and (3) one month Adjusted LIBO Rate plus 1.00%, in each case as in effect on such day plus an interest rate margin for base rate loans. The interest rate margin for base rate loans will be 5.75% per annum.

Eurodollar Loans

 

 

The higher of (1) Adjusted LIBO Rate and (2) 3.00%, in each case plus an interest rate margin for Eurodollar loans. The interest rate margin for Eurodollar loans will be 6.75% per annum. RHDI may elect interest periods of one, two, three or six months for Eurodollar borrowings.

 

Amortization

 

Quarterly amortization payments of

$10,833,247 with all remaining amounts due at maturity.

 

Quarterly amortization payments of (1) $10,000,000 for each fiscal quarter in fiscal 2013 and fiscal 2014,

(2) $7,500,000 for each fiscal quarter in fiscal 2015 and

(3) $6,250,000 for each fiscal quarter in fiscal 2016, with all remaining outstanding amounts due at maturity.

Leverage Ratio

 

Requires a ratio at the end of each fiscal quarter below not exceeding the ratio set forth below opposite such fiscal quarter

 

Fiscal Quarter      Leverage Ratio

6/30/2012                         5.00x

9/30/2012                         4.75x

12/31/2012                       4.75x

3/31/2013                         4.50x

6/30/2013                         4.50x

9/30/2013                         4.25x

12/31/2013                       4.25x

3/31/2014                         4.00x

and thereafter

 

Requires a ratio at the end of each fiscal quarter below not exceeding the ratio set forth below opposite such fiscal quarter:

 

Fiscal Quarter      Leverage Ratio 1Q 2013                    5.50x

2Q 2013                    5.50x

3Q 2013                    5.50x

4Q 2013                    5.50x

1Q 2014                    5.4625x

2Q 2014                    5.425x

3Q 2014                    5.3875x

4Q 2014                    5.35x

1Q 2015                    5.3125x

2Q 2015                    5.275x

3Q 2015                    5.2375x

4Q 2015                    5.20x

1Q 2016                    5.15x

2Q 2016                    5.10x

3Q 2016                    5.05x

4Q 2016                    5.0x

Interest Coverage Ratio

  Not less than 1.75x as of September 30, 2012, stepping up to 1.90x as of March 31, 2013 and further stepping up to 2.00x as of March 31, 2014   Not less than 1.1 to 1.0 at the end of each fiscal quarter.

 

 

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SuperMedia Credit Facility

 

Key Term

  

Current Credit Facility

  

Amended and Restated Credit Facility

Maturity Date

   December 31, 2015    December 31, 2016

Interest Rate Spreads

  

ABR Loans

 

The highest of (1) the prime rate, (2) the federal funds effective rate plus 0.50%, and (3) one month LIBO Rate (as defined in the SuperMedia credit facility) (subject to a floor of 3.00%) plus 1.00%, in each case as in effect on such day plus an interest rate margin of 7.00%.

 

Eurodollar Loans

 

The higher of (1) Adjusted LIBO Rate in effect for the applicable interest period and (2) 3.00%, in each case plus an interest rate margin of 8.00%. SuperMedia may elect interest periods of one, two or three months for Eurodollar borrowings.

  

ABR Loans

 

The highest of (1) the prime rate, (2) the federal funds effective rate plus 0.50%, and (3) one month LIBO Rate (subject to a floor of 3.00%) plus 1.00%, in each case as in effect on such day plus an interest rate margin of 7.60%.

 

Eurodollar Loans

 

The higher of (1) Adjusted LIBO Rate in effect for the applicable interest period and (2) 3.00%, in each case plus an interest rate margin of 8.60%. SuperMedia may elect interest periods of one, two or three months for Eurodollar borrowings.

Amortization

   No amortization.    No amortization.
Leverage Ratio    Requires a ratio at the end of each fiscal quarter not to exceed 7.50x.   

Requires a ratio for net indebtedness (net of up to $50 million of unrestricted cash on hand) at the end of each fiscal quarter below not exceeding the ratio set forth below opposite such fiscal quarter:

 

     

Fiscal Quarter

1Q 2013

2Q 2013

3Q 2013

4Q 2013

1Q 2014

2Q 2014

3Q 2014

4Q 2014

1Q 2015

2Q 2015

3Q 2015

4Q 2015

1Q 2016

2Q 2016

3Q 2016

4Q 2016

   Leverage Ratio

4.75x

4.75x

4.75x

4.75x

4.6875x

4.625x

4.5625x

4.50x

4.50x

4.50x

4.50x

4.50x

4.4375x

4.375x

4.3125x

4.25x

Interest Coverage Ratio    Not less than 1.1 to 1.0 at the end of each fiscal quarter.    Not less than 1.1 to 1.0 at the end of each fiscal quarter.

 

 

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The Prepackaged Plans

The prepackaged plans are an alternative means by which to consummate the transaction, including the financing amendments, through Chapter 11 cases. In the event that Dex One is unable to obtain unanimous lender approval or the approval of a majority of its stockholders to consummate the transaction outside of court, but Dex One receives acceptances of the Dex One prepackaged plan from a majority (counting only those voting on the prepackaged plan) of its senior secured creditors, including the holders of at least 2/3 of the aggregate principal amount (counting only those voting on the prepackaged plan) of each of its senior secured credit facilities, Dex One may seek confirmation of the Dex One prepackaged plan in Chapter 11 cases. In the event that SuperMedia is unable to obtain unanimous lender approval or the approval of a majority of its stockholders to consummate the transaction outside of court, but SuperMedia receives acceptances of the SuperMedia prepackaged plan from a majority of its senior secured creditors, including the holders of at least 2/3 of the aggregate principal amount of its senior secured credit facility, that vote on the prepackaged plan to allow the SuperMedia prepackaged plan to be confirmed under the Bankruptcy Code, SuperMedia may seek confirmation of the SuperMedia prepackaged plan in Chapter 11 cases.

Dex One stockholder acceptance of the Dex One prepackaged plan requires that holders of at least 2/3 in amount of the Dex One common stock held by all Dex One stockholders that vote on the Dex One prepackaged plan vote to accept such plan. SuperMedia stockholder acceptance of the SuperMedia prepackaged plan requires that holders of at least 2/3 in amount of the SuperMedia common stock held by all SuperMedia stockholders that vote on the SuperMedia prepackaged plan vote to accept such plan. Under the “cram down” provisions of the Bankruptcy Code, however, a plan may be confirmed even if stockholders do not vote to accept the plan if the Bankruptcy Court finds that the plan otherwise satisfies the statutory requirements and does not discriminate unfairly and is fair and equitable regarding each class of claims and interests that is impaired under, and has not accepted, the plan. Accordingly, if Dex One senior secured lenders vote to accept the Dex One prepackaged plan but Dex One stockholders do not vote to accept such plan, Dex One may still seek to confirm the plan under the “cram down” provisions of the Bankruptcy Code. SuperMedia may seek to do the same regarding the SuperMedia prepackaged plan if SuperMedia senior secured lenders vote to accept such plan but SuperMedia stockholders do not vote to accept the plan.

Whether or not Dex One stockholders and SuperMedia stockholders, as applicable, vote to accept the Dex One prepackaged plan and SuperMedia prepackaged plan, respectively, such stockholders will receive the same number of shares of Dex Media common stock if the merger is consummated. Dex One stockholders that do not vote to accept the Dex One prepackaged plan will not be “releasing parties” under such plan and, thus, will not release certain claims under the plan. Similarly, SuperMedia stockholders that do not vote to accept the SuperMedia prepackaged plan will not be “releasing parties” under such plan and, thus, will not release certain claims under the plan. The releases are described more fully in “The Prepackaged Plans—The Dex One Prepackaged Plan—Release, Injunction and Related Provisions—Releases by Holders of Claims and Interests” and “The Prepackaged Plans—The SuperMedia Prepackaged Plan—Release, Injunction and Related Provisions—Releases by Holders of Claims and Interests.”

Neither Dex One nor SuperMedia has at this time taken any action approving a bankruptcy filing, and, if the transaction is consummated outside of court, neither Dex One nor SuperMedia will commence bankruptcy cases to consummate their respective prepackaged plans.

Reasons for Dex One and SuperMedia to File for Chapter 11 (See page 158)

As more fully discussed in this document, the amendment and restatement of Dex One’s senior secured financing facilities, among other things, will extend the maturity of Dex One’s senior secured debt until the end of 2016 and will otherwise improve Dex One’s ability to pay down its indebtedness. The amendment and

 

 

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restatement of SuperMedia’s senior secured financing facility will extend the maturity of SuperMedia’s senior secured debt until the end of 2016 and will otherwise improve SuperMedia’s ability to pay down its indebtedness. Consummation of the transaction will improve Dex Media’s operating scale and is expected to generate between $150 million to $175 million of annual run rate cost synergies by 2015. Additionally, Dex One and SuperMedia expect Dex One’s current and future tax attributes, estimated at approximately $1.8 billion, to be applied against Dex Media’s taxable income over time. Dex One and SuperMedia anticipate that consummation of the transaction will enable Dex Media to increase sales of profitable products and services and phase out unprofitable products and services. If Dex One and SuperMedia are unable to obtain the stockholder and senior secured lender consents necessary to consummate the transaction out of court, Dex One and SuperMedia may seek instead to consummate the transaction, including the necessary financing amendments, through separate Chapter 11 cases using the prepackaged plans, if necessary.

Dex One Liquidation Analysis (See page 164)

In order for the Dex One prepackaged plan to be confirmed under the Bankruptcy Code, it must satisfy the “best interests of the creditors” test. With respect to each class of Claims and Interests that would be impaired under the Dex One prepackaged plan, this test requires that each holder of such a Claim or Interest either (1) accept the Dex One prepackaged plan or (2) receive or retain under the Dex One prepackaged plan property of a value, as of the effective date of the prepackaged plan, that is not less than the value such holder would receive if Dex One were liquidated under Chapter 7 of the Bankruptcy Code. After considering the effects that a Chapter 7 liquidation would have on the ultimate proceeds available for distribution to holders of each Class of Claims and Interests, including (1) Dex One’s primary assets are publishing contracts that would have a substantially reduced value in a Chapter 7 liquidation; (2) the increased costs and expenses of a liquidation under Chapter 7 arising from fees payable to a trustee in bankruptcy and professional advisers to such trustee; (3) the additional costs and expenses generated by conversion of any Chapter 11 case to a Chapter 7 case; and (4) the erosion in value of assets in a Chapter 7 case in the context of the expeditious liquidation required under Chapter 7 and the “forced sale” atmosphere that would prevail, Dex One has determined that confirmation of the Dex One prepackaged plan would provide each holder of an allowed claim or Interest with a recovery that is not less than such holder would receive pursuant to the liquidation of Dex One under Chapter 7. As more fully discussed in the Dex One prepackaged plan, Class 5 (DME Credit Facility Claims), Class 6 (DMW Credit Facility Claims), Class 7 (RHDI Credit Facility Claims) and Class 9 (Dex One Interests) are impaired and, thus, entitled to vote to accept or reject the Dex One prepackaged plan. Class 1 (Secured Tax Claims), Class 2 (Other Secured Claims), Class 3 (Other Priority Claims), Class 4 (Senior Subordinated Notes Claims), Class 8 (General Unsecured Claims), and Class 10 (Intercompany Interests) are unimpaired and, thus, presumed to accept the Dex One prepackaged plan. Class 11 (Section 510(b) Claims) is impaired and deemed to reject the Dex One prepackaged plan.

Dex One, with the assistance of Houlihan Lokey, has prepared a liquidation analysis, attached hereto as Appendix H (the “Dex One liquidation analysis”) to assist you in evaluating the Dex One prepackaged plan. The Dex One liquidation analysis compares the projected creditor recoveries that would result from the liquidation of Dex One in a hypothetical case under Chapter 7 of the Bankruptcy Code with the estimated distributions to holders of allowed claims and Interests under the Dex One prepackaged plan.

Underlying the Dex One liquidation analysis are a number of estimates and assumptions that, although developed and considered reasonable by Dex One’s management, are inherently subject to significant economic and competitive uncertainties and contingencies beyond the control of Dex One and the Dex One management. The Dex One liquidation analysis is also based on assumptions with regard to liquidation decisions that are subject to change and significant economic and competitive uncertainties and contingencies beyond the control of Dex One and the Dex One management. Inevitably, some assumptions will not materialize and unanticipated events and circumstances may affect the results of a liquidation of Dex One. Accordingly, the value reflected

 

 

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might not be realized if Dex One were, in fact, to be liquidated. Other underlying assumptions include valuations of Dex One’s assets and liabilities as of a certain date and the incorporation of a hypothetical conversion to a Chapter 7 liquidation as of a certain date. Further, each analysis is subject to potentially material changes, including with respect to economic and business conditions and legal rulings. You are urged to examine carefully all of the assumptions on which the Dex One liquidation analysis are based in connection with this solicitation.

SuperMedia Liquidation Analysis (See page 185)

In order for the SuperMedia prepackaged plan to be confirmed under the Bankruptcy Code, it must satisfy the “best interests of the creditors” test. With respect to each class of Claims and Interests that would be impaired under the SuperMedia prepackaged plan, this test requires that each holder of such a Claim or Interest either (1) accept the SuperMedia prepackaged plan or (2) receive or retain under the SuperMedia prepackaged plan property of a value, as of the effective date of the SuperMedia prepackaged plan, that is not less than the value such holder would receive if SuperMedia were liquidated under Chapter 7 of the Bankruptcy Code. After considering the effects that a Chapter 7 liquidation would have on the ultimate proceeds available for distribution to holders of each Class of Claims and Interests, including (1) SuperMedia’s primary assets are publishing contracts that would have a substantially reduced value in a Chapter 7 liquidation; (2) the increased costs and expenses of a liquidation under Chapter 7 arising from fees payable to a trustee in bankruptcy and professional advisers to such trustee; (3) the additional costs and expenses generated by conversion of any Chapter 11 case to a Chapter 7 case; and (4) the erosion in value of assets in a Chapter 7 case in the context of the expeditious liquidation required under Chapter 7 and the “forced sale” atmosphere that would prevail, SuperMedia has determined that confirmation of the SuperMedia prepackaged plan would provide each holder of an allowed claim or Interest with a recovery that is not less than such holder would receive pursuant to the liquidation of SuperMedia under Chapter 7. As more fully discussed in the SuperMedia prepackaged plan, Class 5 (SuperMedia Credit Facility Claims) and Class 9 (SuperMedia Interests) are impaired and, thus, entitled to vote to accept or reject the SuperMedia prepackaged plan. Class 1 (Secured Tax Claims), Class 2 (Other Secured Claims), Class 3 (Other Priority Claims), Class 8 (General Unsecured Claims), and Class 10 (Intercompany Interests) are unimpaired and, thus, presumed to accept the SuperMedia prepackaged plan. Class 11 (Section 510(b) Claims) is impaired and deemed to reject the SuperMedia prepackaged plan.

SuperMedia, with the assistance of Chilmark Partners (“Chilmark”), has prepared a liquidation analysis, attached hereto as Appendix I (the “SuperMedia liquidation analysis”), to assist holders of Claims and Interests in evaluating the SuperMedia prepackaged plan. The SuperMedia liquidation analysis compares the projected creditor recoveries that would result from the liquidation of SuperMedia in a hypothetical case under Chapter 7 of the Bankruptcy Code with the estimated distributions to holders of Allowed Claims and Interests under the SuperMedia prepackaged plan.

Underlying the SuperMedia liquidation analysis are a number of estimates and assumptions, although developed and considered reasonable by SuperMedia management, that are inherently subject to significant economic and competitive uncertainties and contingencies beyond the control of SuperMedia and the SuperMedia management. The SuperMedia liquidation analysis is also based on assumptions with regard to liquidation decisions that are subject to change and significant economic and competitive uncertainties and contingencies beyond the control of SuperMedia and the SuperMedia management. Inevitably, some assumptions will not materialize and unanticipated events and circumstances may affect the results of a liquidation of SuperMedia. Accordingly, the value reflected might not be realized if SuperMedia were, in fact, to be liquidated. Other underlying assumptions include valuations of SuperMedia’s assets and liabilities as of a specified date and the incorporation of a hypothetical conversion to a Chapter 7 liquidation as of a specified date. Further, each analysis is subject to potentially material changes, including with respect to economic and business conditions and legal rulings. You are urged to examine carefully all of the assumptions on which the SuperMedia liquidation analysis is based in connection with this solicitation.

 

 

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Valuation Analysis

The Dex One prepackaged plan and the SuperMedia prepackaged plan provide for the distribution of Dex Media common stock to the stockholders of Dex One and SuperMedia upon consummation of the transactions contemplated by the prepackaged plans, including consummation of the transactions contemplated by the merger agreement. Accordingly, Houlihan Lokey, in consultation with Dex One and SuperMedia, has performed an analysis of the estimated implied value of Dex Media on a going-concern basis as of December 31, 2012 (the “Valuation Analysis”). You should consider the Valuation Analysis, which is summarized in Appendix J, including the procedures followed, assumptions made, qualifications and limitations on review undertaken described therein, in conjunction with the section titled “Risk Factors” in this document. The Valuation Analysis is dated December 5, 2012 and is based on data and information as of that date. Houlihan Lokey makes no representations as to changes to such data and information that may have occurred since December 5, 2012.

The Valuation Analysis is presented solely for the purpose of providing “adequate information” under Section 1125 of the Bankruptcy Code to enable shareholders entitled to vote to accept or reject the prepackaged plans to make an informed judgment about the plans and should not be used or relied upon for any other purpose, including the purchase or sale of securities of, or claims or equity interests in Dex Media, Dex One or SuperMedia.

Overview of Dex One Prepackaged Plan Structure (See page 158)

The Dex One prepackaged plan effects the transaction and the financing amendments. Additionally, the Dex One prepackaged plan provides for the discharge of Claims and Interests, primarily, through the: (a) issuance of shares of Dex Media common stock; (b) reinstatement of specified Claims and Interests; (c) entry into the financing amendments; and (d) payment of cash.

In accordance with Section 1123(a)(1) of the Bankruptcy Code, Administrative Claims, Professional Claims, and Priority Tax Claims, each as defined in the Dex One prepackaged plan, have not been classified under the Dex One prepackaged plan. The estimated recoveries for such unclassified Claims are set forth below:

 

Claim

  

Prepackaged Plan Treatment

   Projected
Plan Recovery
Administrative Claims and Professional Claims    Paid in full in Cash    100%

Priority Tax Claims

   Paid in full in Cash    100%

The table below summarizes the classification, treatment, voting rights, and estimated recoveries, estimated as of September 30, 2012, of the remaining Claims and Interests under the Dex One prepackaged plan. The projected liquidation recoveries are based on assumptions described in this document, and the recoveries received by holders of Claims and Interests in a liquidation scenario may differ materially from the projected liquidation recoveries listed below.

 

Class

  

Claim or Interest

  

Voting Rights

  

Treatment

   Plan
Recovery
    Liquidation
Recovery1
 
1    Secured Tax Claims2    Not Entitled to Vote / Presumed to Accept    Paid in full in Cash      100     100
2    Other Secured Claims2    Not Entitled to Vote / Presumed to Accept    Reinstated or receive collateral      100    
100

3    Other Priority Claims2    Not Entitled to Vote / Presumed to Accept    Paid in full in Cash      100     100

 

 

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Class

  

Claim or Interest

  

Voting Rights

  

Treatment

   Plan
Recovery
    Liquidation
Recovery
 
4    Senior Subordinated Notes Claims    Not Entitled to Vote / Presumed to Accept    Reinstated      100     0
5    DME Credit Facility Claims    Entitled to Vote    Pro Rata share of amended and restated DME Credit Facility and Pro Rata Cash payment      100     13-16
6    DMW Credit Facility Claims    Entitled to Vote    Pro Rata share of amended and restated DMW Credit Facility and Pro Rata Cash payment      100     14-18
7    RHDI Credit Facility Claims    Entitled to Vote    Pro Rata share of amended and restated RHDI Credit Facility and Pro Rata Cash payment      100     12-16
8    General Unsecured Claims    Not Entitled to Vote / Presumed to Accept    Paid in full in Cash      100     0
9    Dex One Interests    Entitled to Vote    0.2 shares of Dex Media common stock3 for each Allowed Class 9 Interest      100     0
10    Intercompany Interests    Not Entitled to Vote / Presumed to Accept    Unaltered      100     0
11    Section 510(b) Claims    Not Entitled to Vote / Deemed to Reject    Paid in full in Cash or treated like holders of Allowed Class 9 Interests      100    
0

 

1 The liquidation recovery analysis is based on Dex One’s most recent publicly filed consolidated financial statements (unaudited) contained in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.
2 As of September 30, 2012, Dex One does not have any Secured Tax Claims, Other Secured Claims, or Other Priority Claims. However, should such claims be identified, they would receive a 100% recovery based on the priority of proceeds in a liquidation.
3 Under the Dex One prepackaged plan, the term “Newdex Common Stock” is used in place of the term “Dex Media Common Stock,” and means the authorized shares of common stock of the combined company upon consummation of the transaction.

Overview of SuperMedia Prepackaged Plan Structure (See page 180)

The SuperMedia prepackaged plan effects the transaction and the financing amendments. Additionally, the SuperMedia prepackaged plan provides for the discharge of Claims and Interests, primarily, through the: (a) issuance of shares of Dex Media common stock; (b) reinstatement of specified Claims and Interests; (c) entry into the financing amendments; and (d) payment of cash.

 

 

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In accordance with Section 1123(a)(1) of the Bankruptcy Code, Administrative Claims, Professional Claims, and Priority Tax Claims, each as defined in the SuperMedia prepackaged plan, have not been classified under the SuperMedia prepackaged plan. The estimated recoveries for such unclassified Claims are set forth below:

 

Claim

 

Prepackaged Plan Treatment

  Projected
Plan
Recovery
 

Administrative Claims and Professional Claims

  Paid in full in Cash     100

Priority Tax Claims

  Paid in full in Cash     100

The table below summarizes the classification, treatment, voting rights, and estimated recoveries, estimated as of September 30, 2012, of the remaining Claims and Interests under the SuperMedia prepackaged plan. The classes in the SuperMedia prepackaged plan have been numbered in a manner consistent with the Dex One prepackaged plan for convenience and ease of reading. There is no class 4, 6 or 7 under the SuperMedia plan. The projected liquidation recoveries are based on assumptions described in this document, and the recoveries received by holders of Claims and Interests in a liquidation scenario may differ materially from the projected liquidation recoveries listed below.

 

Class

  

Claim or Interest

  

Voting Rights

  

Treatment

   Plan
Recovery
    Liquidation
Recovery1
 
1    Secured Tax Claims2    Not Entitled to Vote / Presumed to Accept    Paid in full in Cash      100     100
2    Other Secured Claims2    Not Entitled to Vote / Presumed to Accept    Reinstated or receive collateral      100     100
3    Other Priority Claims2    Not Entitled to Vote / Presumed to Accept    Paid in full in Cash      100     100
5    SuperMedia Credit Facility Claims    Entitled to Vote    Pro Rata share of amended and restated SuperMedia Credit Facility and Pro Rata Cash payment      100     13-16
8    General Unsecured Claims    Not Entitled to Vote / Presumed to Accept    Paid in full in Cash      100     0
9    SuperMedia Interests    Entitled to Vote    0.4386 shares of Dex Media Common Stock3 for each Allowed Class 9 Interest      100     0
10    Intercompany Interests    Not Entitled to Vote / Presumed to Accept    Unaltered      100     0
11    Section 510(b) Claims    Not Entitled to Vote / Deemed to Reject    Paid in full in Cash or treated like holders of Allowed Class 9 Interests      100     0

 

1 The liquidation recovery analysis is based on SuperMedia’s most recent publicly filed consolidated financial statements (unaudited) contained in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.
2 As of September 30, 2012, SuperMedia does not have any Secured Tax Claims, Other Secured Claims or Other Priority Claims. However, should such claims be identified, they would receive a 100% recovery based on the priority of proceeds in a liquidation.
3 Under the SuperMedia prepackaged plan, the term “Newdex Common Stock” is used in place of the term “Dex Media Common Stock” and means the authorized shares of common stock of the combined company upon the consummation of the transaction.

 

 

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Releases under the Prepackaged Plans

Each of the Dex One prepackaged plan and the SuperMedia prepackaged plan contain broad releases of claims against Dex One and its subsidiaries, senior secured lenders, the administrative agents under the Dex One Credit Facilities and affiliates, and SuperMedia and its subsidiaries, senior secured lenders, the administrative agents under the SuperMedia credit facility and affiliates. These releases also cover claims against directors and officers. Please read these releases before voting on the applicable prepackaged plan.

Voting Procedures

The solicitation package (except the proxy and ballots) may also be obtained from Epiq by: (1) calling the Dex One and SuperMedia restructuring hotline at (866) 734-9393 within the U.S. or Canada or, outside of the U.S. or Canada, by calling (646) 282-2500, and/or (2) writing to Dex One Corporation, c/o Investor Relations, 1001 Winstead Drive, Cary, North Carolina 27513 or SuperMedia Inc., c/o Investor Relations, 2200 West Airfield Drive, P.O. Box 619810, D/FW Airport, Texas 75261. If the Chapter 11 alternative is pursued, you may also obtain copies of any pleadings filed in the Dex One’s or SuperMedia’s Chapter 11 cases for free by visiting the Dex One’s or SuperMedia’s restructuring website, when available, or for a fee via PACER at http://www.deb.uscourts.gov.

January 25, 2013, the record date, which is also the record date for the special meetings as described earlier in this document, will be the date for determining which holders of Claims and Interests are entitled to vote to accept or reject the prepackaged plans and receive the solicitation package in accordance with the solicitation procedures. Except as otherwise set forth herein, this voting record date and all of Dex One’s and SuperMedia’s solicitation and voting procedures shall apply to all of Dex One’s and SuperMedia’s creditors and other parties in interest.

In order for the holder of a Claim or Interest to have its ballot counted as a vote to accept or reject the Dex One prepackaged plan or the SuperMedia prepackaged plan, such holder’s ballot must be properly completed, executed, and delivered by using the return envelope provided by: (a) first class mail; (b) courier; or (c) personal delivery, so that such holder’s ballot or the master ballot incorporating the vote cast by such ballot, as applicable, is actually received by Epiq by the voting deadline.

Confirmation of the Prepackaged Plans (See pages 165 and 185)

The Bankruptcy Court, after notice, may hold a hearing to approve, or “confirm”, the Dex One prepackaged plan under Section 1128(a) of the Bankruptcy Code. Similarly, the Bankruptcy Court, after notice, may hold a hearing to confirm the SuperMedia prepackaged plan under Section 1128(a) of the Bankruptcy Code. Section 1128(b) of the Bankruptcy Code provides that any party in interest may object to confirmation. Dex One and SuperMedia have not filed for Chapter 11 bankruptcy. If Dex One and SuperMedia file for Chapter 11 bankruptcy, upon doing so, each will request for the Bankruptcy Court to set a date or dates for the Bankruptcy Court to hold a hearing or hearings to approve each of the Dex One prepackaged plan and the SuperMedia prepackaged plan. Also, the deadline for parties in interest to object to the plans will be set at such time. All such objections must be filed with the Bankruptcy Court and served on Dex One or SuperMedia, as applicable, and certain other parties in interest in accordance with the applicable orders of the Bankruptcy Court so that they are received on or before the deadline to file such objections.

Support Agreements

Dex One (See page 178)

On December 5, 2012, Dex One entered into the Dex One support agreement with certain of its senior secured lenders. Additional consenting lenders may join the Dex One support agreement in the future.

 

 

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Under the Dex One support agreement, Dex One agrees to take reasonable and appropriate action consistent with its obligations under the merger agreement and the Dex One support agreement in furtherance of the transaction and, if applicable, confirmation and consummation of the Dex One prepackaged plan, (1) to obtain signature pages to the Dex One proposed financing amendments, (2) to provide a disclosure statement (the “Dex One lender disclosure statement”) to the lenders under the Dex One credit facilities and solicit their votes to accept the Dex One prepackaged plan, and (3) if Dex One elects to effectuate the transaction through Chapter 11 cases, to file voluntary petitions under Chapter 11 and seek approval of certain relief from the Bankruptcy Court and confirmation of the Dex One prepackaged plan.

The lender parties to the Dex One support agreement agree to (1) support and take any reasonable action in furtherance of the Dex One proposed financing amendments and the effectiveness of the Dex One support agreement, (2) timely vote their claims to accept the Dex One prepackaged plan and not change or withdraw such vote unless such plan is modified in a manner materially inconsistent with the Dex One support agreement or materially adverse to the rights of the consenting lenders under the Dex One support agreement, and (3) in the event Dex One elects to effectuate the transaction through a Chapter 11 process, (a) support approval of the Dex One lender disclosure statement and confirmation of the Dex One prepackaged plan, (b) support certain relief to be requested by Dex One from the Bankruptcy Court, (c) refrain from taking any action inconsistent with the confirmation or consummation of the Dex One prepackaged plan, and (d) not propose, support, solicit or participate in the formulation of any plan other than the Dex One prepackaged plan.

The Dex One support agreement shall terminate automatically upon certain events, including, without limitation, the following:

 

   

If Dex One has provided notice that it will effectuate the transaction outside of court and (a) if SuperMedia has not filed Chapter 11 cases, if the Dex One proposed financing amendments have not been consummated by 130 days after the Dex One support agreement effective date, or (b) if SuperMedia has filed Chapter 11 cases, if the Dex One proposed financing amendments have not been consummated by 190 days after the effective date of the Dex One support agreement.

 

   

If lender parties to the Dex One support agreement hold less than 100% of the loans under the Dex One credit facilities and Dex One has not commenced solicitation of lender votes on the Dex One prepackaged plan by 100 days after the effective date of the Dex One support agreement.

 

   

The termination of the SuperMedia support agreement (described below).

 

   

If Dex One has commenced Chapter 11 cases and (1) they are dismissed, converted to Chapter 7 cases, or an examiner is appointed, (2) an order is entered terminating Dex One’s exclusive right to file a plan of reorganization, or (3) Dex One’s consensual use of cash collateral is terminated in accordance with an interim or final cash collateral order entered by the Bankruptcy Court.

 

   

The termination of the merger agreement pursuant to its terms.

 

   

If Dex One elects to terminate the Dex One support agreement in accordance with the exercise of its fiduciary duties, or the lender parties to the Dex One support agreement elect to terminate the Dex One support agreement upon notice that Dex One is reasonably likely to breach the Dex One support agreement in accordance with the exercise of its fiduciary duties.

The Dex One support agreement also shall terminate ten business days after (1) either Dex One or lender parties to the Dex One support agreement holding at least 2/3 of the aggregate outstanding principal amount of each of the Dex One credit facilities held by all lender parties to the Dex One support agreement give written notice of a material breach of the Dex One support agreement and such breach is not cured or waived, or (2) Dex One and the administrative agents for the Dex One credit facilities (the “Dex One agents”) have received executed signature pages to the Dex One support agreement from lenders (a) holding no less than 2/3 of the

 

 

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outstanding principal amount of the loans under each of the Dex One credit facilities and (b) representing a majority of all lenders under each of the Dex One credit facilities (the “Dex One bankruptcy threshold”), and notice is subsequently given by either the Dex One agents or Dex One that the Dex One bankruptcy threshold is no longer satisfied, unless the threshold is again satisfied by the end of the ten business day cure period.

In addition, the Dex One support agreement shall terminate ten business days after the occurrence of any of the following specified events, if such event has not been cured by Dex One or waived by the Dex One agents and by lender parties to the Dex One support agreement holding at least 2/3 of the aggregate outstanding principal amount of each of the Dex One credit facilities held by all lender parties to the Dex One support agreement:

 

   

Fifty-five days after the Dex One support agreement effective date unless definitive loan documentation (other than the Dex One proposed financing amendments) has been made available to the Dex One lenders.

 

   

Seventy-five days after this document is filed with the SEC unless this document has been declared effective by the SEC.

 

   

Ten days after the solicitation of the lenders under the Dex One credit facilities is commenced unless definitive bankruptcy documentation (other than the Dex One prepackaged plan and the Dex One lender disclosure statement) has been made available to the Dex One lenders.

 

   

Five business days after the end of the lender solicitation period unless Dex One has commenced Chapter 11 cases or has provided written notice to the Dex One agents that it has received the necessary consents from the Dex One credit facilities lenders and stockholders to effectuate the transaction without filing Chapter 11 cases.

 

   

If Dex One does not file the Dex One prepackaged plan and the Dex One lender disclosure statement on the date it files the Chapter 11 cases.

 

   

If the Bankruptcy Court has not entered interim and final orders authorizing Dex One to use cash collateral, granting adequate protection to the Dex One lenders and approving cash management systems within certain specified periods.

 

   

Fifty days after the date Dex One files the Chapter 11 cases unless the Bankruptcy Court has entered an order confirming the Dex One prepackaged plan.

 

   

After filing the Chapter 11 cases, Dex One (1) withdraws the Dex One prepackaged plan, (2) publicly announces an intention not to proceed with the Dex One prepackaged plan, or (3) files any motion, pleading, plan of reorganization and/or disclosure statement that is materially inconsistent with the Dex One prepackaged plan, or materially adversely affects the rights of the consenting lenders under the Dex One support agreement.

 

   

The Bankruptcy Court grants relief that is materially inconsistent with the Dex One support agreement or materially and adversely affects the rights of the lender parties to the Dex One support agreement.

 

   

If any change or event occurs that has or would reasonably be expected to have a material adverse effect on Dex One or the validity or enforceability of the Dex One support agreement, merger agreement, or Dex One credit facilities.

 

   

The occurrence of an event of default under the Dex One credit facilities, with certain exceptions set forth in the Dex One support agreement.

 

   

The amendment or modification of the Dex One prepackaged plan or the Dex One lender disclosure statement which is materially inconsistent with the Dex One prepackaged plan or materially adversely affects the rights of the lender parties to the Dex One support agreement.

 

 

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The amendment or modification of the SuperMedia prepackaged plan or SuperMedia lender disclosure statement which is materially inconsistent with the SuperMedia prepackaged plan or materially adversely affects the rights of the lender parties to the Dex One support agreement.

Upon the termination date of the Dex One support agreement, all ballots to accept the Dex One prepackaged plan and signature pages to the Dex One proposed financing amendments will be withdrawn and deemed null and void for all purposes, unless a consenting lender provides notice within five business days that such consenting lender’s vote shall continue to be effective. See “Risk Factors—Risk Factors Relating to the Merger—The support of certain secured creditors of Dex One and SuperMedia for the necessary amendments to the applicable credit facilities is subject to the terms of support agreements between Dex One and certain of its secured creditors and SuperMedia and certain of its secured creditors, which are subject to termination.”

Lenders holding more than half in number and at least 2/3 in amount of (but not all) claims under each of the Dex One credit facilities have become consenting lenders. As a result, the number and amount of Dex One credit facilities claims held by lenders contractually obligated to support the Dex One prepackaged plan exceed the thresholds required for approval of such prepackaged plan by each class of Dex One credit facilities claims under applicable bankruptcy law.

Under the Dex One support agreement, certain waivers and amendments to each of the Dex One credit facilities became effective upon execution of the Dex One support agreement by a majority of lenders under the applicable Dex One credit facility, including the waiver of any default or event of default resulting from (i) the failure to deliver an audit for the fiscal year ended December 31, 2012 without a “going concern” or like qualification, and (ii) actions taken, contemplated by, or consistent with the Dex One support agreement or otherwise for the purpose of effecting the transaction through the commencement of the Chapter 11 cases.

SuperMedia (See page 199)

On December 5, 2012, SuperMedia entered into the SuperMedia support agreement with certain of its senior secured lenders. Additional consenting lenders may join the SuperMedia support agreement in the future.

Under the SuperMedia support agreement, SuperMedia agrees to take reasonable and appropriate action consistent with its obligations under the merger agreement and the SuperMedia support agreement in furtherance of the transaction, (1) to obtain signature pages to the SuperMedia proposed financing amendment, (2) to provide a disclosure statement to the lenders (the “SuperMedia lender disclosure statement”) under the SuperMedia credit agreement and solicit their votes to accept the SuperMedia prepackaged plan, and (3) if SuperMedia elects to effectuate the transaction through Chapter 11 cases, to file voluntary petitions under Chapter 11 and seek approval of certain relief from the Bankruptcy Court and confirmation of the SuperMedia prepackaged plan.

The lender parties to the SuperMedia support agreement agree to (1) support and take any reasonable action in furtherance of the SuperMedia proposed financing amendment and the effectiveness of the SuperMedia support agreement, (2) timely vote their claims to accept the SuperMedia prepackaged plan and not change or withdraw such vote unless such plan is modified in a manner materially inconsistent with support agreement or materially adverse to the rights of the consenting lenders under the SuperMedia support agreement, and (3) in the event SuperMedia elects to effectuate the transaction through a Chapter 11 process, (a) support approval of the SuperMedia lender disclosure statement and confirmation of the SuperMedia prepackaged plan, (b) support certain relief to be requested by SuperMedia from the Bankruptcy Court, (c) refrain from taking any action inconsistent with the confirmation or consummation of the SuperMedia prepackaged plan and (d) not propose, support, solicit or participate in the formulation of any plan other than the SuperMedia prepackaged plan.

 

 

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The SuperMedia support agreement shall terminate automatically upon certain events, including the following:

 

   

If SuperMedia has provided notice that it will effectuate the transaction outside of court and (a) if Dex has not filed Chapter 11 cases, if the SuperMedia proposed financing amendment has not been consummated by 130 days after the effective date of the SuperMedia support agreement, or (b) if Dex has filed chapter 11 cases, if the SuperMedia proposed financing amendment has not been consummated by 190 days after the effective date of the SuperMedia support agreement.

 

   

If lender parties to the SuperMedia support agreement hold less than 100% of the loans under the SuperMedia credit agreement and SuperMedia has not commenced solicitation of lender votes on the SuperMedia prepackaged plan by 100 days after the effective date of the SuperMedia support agreement.

 

   

The termination of the Dex support agreement (described above).

 

   

If SuperMedia has commenced Chapter 11 cases and (1) they are dismissed, converted to Chapter 7 cases or an examiner is appointed, (2) an order is entered terminating SuperMedia’s exclusive right to file a plan of reorganization, or (3) SuperMedia’s consensual use of cash collateral is terminated in accordance with an interim or final cash collateral order entered by the Bankruptcy Court.

 

   

The termination of the merger agreement pursuant to its terms.

 

   

If SuperMedia elects to terminate the SuperMedia support agreement in accordance with the exercise of its fiduciary duties, or the lender parties to the SuperMedia support agreement elect to terminate the SuperMedia support agreement upon notice that SuperMedia is going to terminate the SuperMedia support agreement in accordance with the exercise of its fiduciary duties.

The SuperMedia support agreement also shall terminate ten business days after (1) either SuperMedia or lender parties to the SuperMedia support agreement holding at least 2/3 of the aggregate outstanding principal amount of loans held by all lender parties to the SuperMedia support agreement gives written notice of a material breach of the support agreement and such breach is not cured or waived, or (2) SuperMedia and the administrative agent for the SuperMedia credit facility (the “SuperMedia agent”) have received executed signature pages to the SuperMedia support agreement from lenders (a) holding no less than 2/3 of the outstanding principal amount of the loans under the SuperMedia credit facility and (b) representing a majority of all lenders under the SuperMedia credit facility (the “SuperMedia bankruptcy threshold”), and notice is subsequently given by either the SuperMedia agent or SuperMedia that the SuperMedia bankruptcy threshold is no longer satisfied, unless the threshold is again satisfied by the end of the ten business day cure period.

In addition, the SuperMedia support agreement shall terminate ten business days after the occurrence of any of the following specified events, if such event has not been cured by SuperMedia or waived by the SuperMedia agent and lender parties to the SuperMedia support agreement holding at least 2/3 of the aggregate outstanding principal amount of loans held by all lender parties to the SuperMedia support agreement.

 

   

Fifty-five days after the SuperMedia support agreement effective date unless definitive loan documentation (other than the SuperMedia proposed financing amendment) has been made available to the lender parties under the SuperMedia support agreement.

 

   

Seventy-five days after this document is filed with the SEC unless this document has been declared effective by the SEC.

 

   

Ten days after the solicitation of the SuperMedia lenders is commenced unless definitive bankruptcy documentation (other than the SuperMedia prepackaged plan and SuperMedia lender disclosure statement) has been made available to the lender parties to the SuperMedia support agreement.

 

 

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Five business days after the end of the lender solicitation unless SuperMedia has commenced Chapter 11 cases or has provided written notice to the SuperMedia agent that it has received the necessary consents from its lenders and stockholders to effectuate the transaction without filing Chapter 11 cases.

 

   

If SuperMedia does not file the SuperMedia prepackaged plan and SuperMedia lender disclosure statement on the date it files the Chapter 11 cases.

 

   

If the Bankruptcy Court has not entered interim and final orders authorizing SuperMedia to use cash collateral, granting adequate protection to the SuperMedia lenders and approving cash management systems within certain specified periods.

 

   

Fifty days after the date SuperMedia files the Chapter 11 cases unless the Bankruptcy Court has entered an order confirming the SuperMedia prepackaged plan.

 

   

After filing the Chapter 11 cases, SuperMedia (1) withdraws the SuperMedia prepackaged plan, (2) publicly announces an intention not to proceed with the SuperMedia prepackaged plan, or (3) files any motion, pleading, plan of reorganization and/or disclosure statement that is materially inconsistent with the SuperMedia prepackaged plan, or materially adversely affects the rights of the consenting lenders under the SuperMedia support agreement.

 

   

The Bankruptcy Court grants relief that is materially inconsistent with the SuperMedia support agreement or materially adversely affects the rights of lender parties the SuperMedia support agreement.

 

   

If any change or event occurs that has or would reasonably be expected to have a material adverse effect on SuperMedia or the validity or enforceability of the SuperMedia support agreement, merger agreement or SuperMedia credit facility.

 

   

The occurrence of an event of default under the SuperMedia credit facility, with certain exceptions set forth in the SuperMedia support agreement.

 

   

The amendment or modification of the SuperMedia prepackaged plan or SuperMedia lender disclosure statement which is materially inconsistent with the SuperMedia prepackaged plan or materially adversely affects the rights of the lender parties to the SuperMedia support agreement.

 

   

The amendment or modification of the Dex One prepackaged plan or Dex One lender disclosure statement which is materially inconsistent with the Dex One prepackaged plan or materially adversely affects the rights of the lender parties to the SuperMedia support agreement.

Upon the termination date of the SuperMedia support agreement, all votes to accept the SuperMedia prepackaged plan and signature pages to the SuperMedia proposed financing amendment will be withdrawn and deemed null and void for all purposes, unless a consenting lender provides notice within five business days that such consenting lender’s vote shall continue to be effective. See “Risk Factors—Risk Factors Relating to the Merger—The support of certain secured creditors of Dex One and SuperMedia for the necessary amendments to the applicable credit facilities is subject to the terms of support agreements between Dex One and certain of its secured creditors and SuperMedia and certain of its secured creditors, which are subject to termination.”

Lenders holding more than half in number and at least 2/3 in amount of (but not all) claims under the SuperMedia credit facility have become consenting lenders. As a result, the number and amount of SuperMedia credit facility claims held by lenders contractually obligated to support the SuperMedia prepackaged plan exceed the thresholds required for approval of such prepackaged plan by the SuperMedia credit facility lenders under applicable bankruptcy law.

 

 

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Under the SuperMedia support agreement, certain waivers and amendments to the SuperMedia credit facility became effective upon execution of the SuperMedia support agreement by a majority of lenders under the SuperMedia credit facility, including the waiver of any event of default resulting from (i) the failure to deliver an audit for the fiscal year ended December 31, 2012 without a “going concern” or like qualification, and (ii) actions taken, contemplated by, or consistent with the SuperMedia support agreement or otherwise for the purpose of effecting the transaction through the commencement of the Chapter 11 cases.

The Stockholder Meetings

The Dex One Special Meeting (See page 61)

The Dex One special meeting will be held at Dex One’s corporate headquarters, 1001 Winstead Drive, Cary, North Carolina 27513 on March 13, 2013 at 1:00 p.m., local time. At the Dex One special meeting, Dex One stockholders will be asked to consider and vote upon:

 

   

the approval and adoption of the merger agreement and the transactions it contemplates;

 

   

a proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to Dex One’s named executive officers that is based on or otherwise relates to the transaction; and

 

   

a proposal to approve the adjournment of the special meeting, including, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve either of the foregoing proposals.

In addition, Dex One stockholders are also being asked to vote to accept the Dex One prepackaged plan.

The Dex One board of directors has fixed the close of business on January 25, 2013 as the record date for the Dex One special meeting and for determining stockholders eligible to vote on the various proposals. Only Dex One stockholders of record at that time are entitled to notice of the Dex One special meeting or any adjournment or postponement of the Dex One special meeting and to vote on the Dex One out of court proposal and the Dex One bankruptcy proposal. Approval of the Dex One out of court proposal requires the approval by the affirmative vote of a majority of all votes entitled to be cast by the holders of Dex One common stock. Approval of the Dex One bankruptcy proposal requires the approval by the affirmative vote of 2/3 of all votes actually cast by the holders of Dex One common stock.

Each share of Dex One common stock outstanding on the record date entitles the holder to one vote on each matter to be voted upon by stockholders at the special meeting. Approval and adoption of the merger agreement and the transactions it contemplates requires the affirmative vote of a majority of all the votes entitled to be cast by the holders of Dex One common stock. Because the affirmative vote of a majority of all the votes entitled to be cast by the holders of Dex One common stock is needed for us to proceed with the transaction, the failure to vote by proxy or in person will have the same effect as a vote against the transaction. Abstentions and broker non-votes also will have the same effect as a vote against the transaction. Approval of the Dex One prepackaged plan requires the affirmative vote of 2/3 of all votes cast by the holders of Dex One common stock. Abstentions and broker non-votes will have no effect on this vote to accept the Dex One prepackaged plan.

As of the record date, directors and executive officers of Dex One and their affiliates had the right to vote 1,277,449 shares of Dex One common stock, or approximately 2.5% of the outstanding Dex One common stock entitled to be voted at the Dex One special meeting.

 

 

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The Dex One board of directors believes that the transaction is in the best interests of Dex One and its stockholders and has unanimously approved and adopted the merger agreement and the transactions it contemplates. For the factors considered by the Dex One board of directors in reaching its decision to approve the merger agreement and the transactions each agreement contemplates, see “Proposal 1: The Transaction — Dex One’s Reasons for the Transaction; Recommendation of the Dex One Board of Directors.” The Dex One board of directors unanimously recommends that the Dex One stockholders vote “FOR” the proposal to approve and adopt the merger agreement and the transactions it contemplates and vote to “ACCEPT” the Dex One prepackaged plan.

The SuperMedia Special Meeting (See page 65)

The SuperMedia special meeting will be held at SuperMedia’s corporate headquarters, 2200 West Airfield Drive, D/FW Airport, Texas 75261, on March 13, 2013 at 12:00 p.m., local time. At the SuperMedia special meeting, SuperMedia stockholders will be asked to consider and vote upon:

 

   

the approval and adoption of the merger agreement and the transactions it contemplates;

 

   

a proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to SuperMedia’s named executive officers that is based on or otherwise relates to the transaction; and

 

   

a proposal to approve the adjournment of the special meeting, including, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve either of the foregoing proposals.

In addition, SuperMedia stockholders are being asked to vote to accept the SuperMedia prepackaged plan.

The SuperMedia board of directors has fixed the close of business on January 25, 2013 as the record date for the SuperMedia special meeting and for determining stockholders eligible to vote on the various proposals. Only SuperMedia stockholders of record at that time are entitled to notice of the SuperMedia special meeting or any adjournment or postponement of the SuperMedia special meeting and to vote on the SuperMedia out of court proposal and the SuperMedia bankruptcy proposal. Approval of the SuperMedia out of court proposal requires the approval by the affirmative vote of a majority of all votes entitled to be cast by the holders of SuperMedia common stock. Approval of the SuperMedia bankruptcy proposal requires the approval by the affirmative vote of 2/3 of all votes actually cast by the holders of SuperMedia common stock.

Each share of SuperMedia common stock outstanding on the record date entitles the holder to one vote on each matter to be voted upon by stockholders at the special meeting. Approval and adoption of the merger agreement and the transactions it contemplates requires the affirmative vote of a majority of all the votes entitled to be cast by the holders of SuperMedia common stock. Because the affirmative vote of a majority of all the votes entitled to be cast by the holders of SuperMedia common stock is needed for us to proceed with the transaction, the failure to vote by proxy or in person will have the same effect as a vote against the transaction. Abstentions and broker non-votes also will have the same effect as a vote against the transaction. Approval of the SuperMedia prepackaged plan requires the approval by the affirmative vote of 2/3 of all votes cast by the holders of SuperMedia common stock. Abstentions and broker non-votes will have no effect on this vote to accept the SuperMedia prepackaged plan.

As of the SuperMedia record date, directors and executive officers of SuperMedia and their affiliates had the right to vote 395,142 shares of SuperMedia common stock, or approximately 2.5% of the outstanding SuperMedia common stock entitled to vote at the SuperMedia special meeting. In addition, one of SuperMedia’s directors, John Slater, currently serves as a senior vice president at Paulson & Co. Inc., which beneficially owns 2,607,506 shares of SuperMedia common stock, or approximately 16.8% of the SuperMedia common stock entitled to vote at the SuperMedia special meeting.

 

 

 

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The SuperMedia board of directors believes that the transaction is in the best interests of SuperMedia and its stockholders and, by a unanimous vote of all directors voting, has approved and adopted the merger agreement and the transactions it contemplates. For the factors considered by the SuperMedia board of directors in reaching its decision to approve the merger agreement and the transactions it contemplates, see “Proposal 1: The Transaction — SuperMedia’s Reasons for the Transaction; Recommendation of the SuperMedia Board of Directors.” The SuperMedia board of directors unanimously recommends that the SuperMedia stockholders vote “FOR” the proposal to approve and adopt the merger agreement and the transactions it contemplates and vote to “ACCEPT” the SuperMedia prepackaged plan.

 

 

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The Companies

Dex One Corporation (See page 69)

Dex One Corporation, the successor to R.H. Donnelley Corporation, is a marketing solutions company that helps local business and consumers connect with each other. Dex One’s marketing consultants provide helpful service, advice and value to local business in order for them to thrive in an increasingly complex and fragmented marketing landscape. Dex One Corporation offers customers a broad portfolio of marketing solutions, from print yellow pages to digital services that leverage consumers’ increasing utilization of local, social and mobile tools. Dex One provides consumers with relevant and trusted information to satisfy their local shopping needs when and how they want. The principal executive offices of Dex One are located at 1001 Winstead Drive, Cary, North Carolina 27513, and its telephone number is (919) 297-1600. Dex One’s corporate internet website is located at www.DexOne.com.

Additional information about Dex One and its subsidiaries, including a full description of the condition and performance of Dex One’s business, is included in documents incorporated by reference in this document, including Dex One’s Annual Report on Form 10-K for the year ended December 31, 2011 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012 and current reports on Form 8-K. See “Where You Can Find More Information.”

SuperMedia Inc. (See pages 69 and 231; Appendices M, N and O)

SuperMedia Inc. is one of the largest yellow pages directory publishers in the United States as measured by revenue. SuperMedia is the official publisher of Verizon, FairPoint and Frontier print directories in the markets in which these companies are the incumbent local telephone exchange carriers. SuperMedia uses the brand Verizon, FairPoint and Frontier on its print directories in these and other specified markets. SuperMedia also offers digital advertising solutions. SuperMedia places its clients’ business information into a portfolio of local media solutions, which includes the Superpages directories, Superpages.com, SuperMedia’s digital local search resource on both desktop and mobile devices, the Superpages.com network, a digital syndication network that places local business information across more than 250 websites, mobile sites and mobile applications, and the Superpages direct mailers. In addition, SuperMedia offers solutions for social media, digital content creation and management, reputation management and search engine optimization. The principal executive offices of SuperMedia are located at 2200 West Airfield Drive, D/FW Airport, Texas 75261, and its telephone number is (972) 453-7000. SuperMedia’s corporate internet website is located at www.SuperMedia.com.

Additional information about SuperMedia and its subsidiaries, including a full description of the condition and performance of SuperMedia’s business, is included in the section entitled “Additional Information About SuperMedia” and Appendices M-O, which contain SuperMedia’s consolidated financial statements and related notes at December 31, 2011 and December 31, 2010, for each of the three years in the period ended December 31, 2011, at September 30, 2012 and for the three and nine month periods ended September 30, 2012.

Dex Media, Inc. (See page 70)

Dex Media, Inc. (currently named Newdex, Inc.) is a Delaware corporation and currently a direct wholly owned subsidiary of Dex One. Newdex was organized on August 17, 2012, solely for the purpose of effecting the transaction. Pursuant to the merger agreement, Dex One will be merged with and into Newdex. Dex One currently has a subsidiary named Dex Media, Inc., which is the intermediate holding company of DME and DMW. Dex Media, Inc. will change its name to Dex Media Holdings, Inc. upon consummation of the transaction. As a result of the transactions contemplated by the merger agreement, Newdex will change its name to Dex Media, Inc. and will become a publicly traded corporation, and former SuperMedia and Dex One stockholders will own stock in Dex Media. Newdex has not carried on any activities other than in connection with the transaction. Newdex’s principal executive offices are located at 1001 Winstead Drive, Cary, North Carolina 27513, and its telephone number is (919) 297-1600.

 

 

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After the consummation of the transaction, the location of Dex Media’s headquarters and principal executive offices will be 2200 West Airfield Drive, P.O. Box 61980, D/FW Airport, Texas 75261, and its telephone number will be (972) 453-7000.

Spruce Acquisition Sub, Inc. (See page 71)

Spruce Acquisition Sub, Inc. (“Merger Sub”) is a newly formed Delaware corporation and a direct wholly owned subsidiary of Newdex. Merger Sub was formed solely for the purpose of effecting the proposed merger with SuperMedia and has not carried on any activities other than in connection with the proposed transaction. Pursuant to the merger agreement, Merger Sub will merge with and into SuperMedia. Merger Sub’s address is 1001 Winstead Drive, Cary, North Carolina 27513, and its telephone number is (919) 297-1600.

 

 

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SELECTED HISTORICAL FINANCIAL DATA OF DEX ONE

The following table presents selected historical financial data for Dex One (the “Successor Company”) as of and for the year ended December 31, 2011 and the eleven months ended December 31, 2010 and, because Dex One emerged from Chapter 11 on January 29, 2010, selected historical financial data for R.H. Donnelley Corporation (the “Predecessor Company”) as of and for the one month ended January 31, 2010 and for the years ended December 31, 2009, 2008 and 2007, which were derived from the Successor Company’s and Predecessor Company’s audited consolidated financial statements, respectively. The selected historical financial data as of and for the nine months ended September 30, 2012 and 2011 were derived from the Successor Company’s unaudited consolidated financial statements, which, in the opinion of Dex One’s management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results of the unaudited interim period. You should read this information in conjunction with Dex One’s consolidated financial statements and related notes included in Dex One’s Annual Report on Form 10-K for the year ended December 31, 2011 and Dex One’s Quarterly Report on Form 10-Q for the nine month period ended September 30, 2012 and Dex One’s current report on Form 8-K, which are incorporated by reference in this document and from which this information is derived. See “Where You Can Find More Information.”

 

 

    Predecessor Company          Successor Company  
    Years Ended December 31,     One Month
Ended
January 31,
2010 (1)
         Eleven
Months
Ended
December 31,
2010 (1)
    Year Ended
December 31,
2011
    Nine Months Ended
September 30,
 

(in millions, except per share
data)

  2007(6)     2008     2009                2011     2012  

Statements of Operations Data:

                   

Net revenue

  $ 2,680      $ 2,617      $ 2,202      $ 160          $ 831      $ 1,481      $ 1,129      $ 999   

Impairment charges(2)

    (20     (3,870     (7,338     —              (1,159     (801     (801     —     

Operating income (loss)

    905        (3,006     (6,798     64            (1,294     (430     (510     107   

Gain on sale of assets(3)

    —          —          —          —              —          13        13        —     

Gain (loss) on debt transactions, net(4)

    (26     265        —          —              —          —          —          140   

Reorganization items, net(5)

    —          —          (95     7,793            —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

  $ 47      $ (2,298   $ (6,453   $ 6,920          $ (924   $ (519   $ (525   $ 98   
 

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (Loss) Per Share:

                   

Basic

  $ 0.66      $ (33.41   $ (93.67   $ 100.27          $ (18.46   $ (10.35   $ (10.47   $ 1.94   

Diluted

  $ 0.65      $ (33.41   $ (93.67   $ 100.21          $ (18.46   $ (10.35   $ (10.47   $ 1.93   

Shares Used in Computing Earnings (Loss) Per Share:

                   

Basic

    70.9        68.8        68.9        69.0            50.0        50.1        50.1        50.6   

Diluted

    72.0        68.8        68.9        69.1            50.0        50.1        50.1        50.6   

Balance Sheet Data:

                   

Total assets(7)

  $ 16,089      $ 11,881      $ 4,499      $ 5,913          $ 4,489      $ 3,460      $ 3,452      $ 2,863   

Long-term debt, including current maturities(7)

    10,176        9,622        3,555        3,265            2,737        2,510        2,552        2,005   

Liabilities subject to compromise(7)

    —          —          6,353        —              —          —          —          —     

Shareholders’ equity (deficit)(7)

    1,823        (493     (6,919     1,451            526        (10     7        92   

 

 

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(1) As a result of Dex One’s emergence from Chapter 11 in January 2010, financial information for Dex One is presented as of and for the eleven months ended December 31, 2010. Financial information for the Predecessor Company is presented as of and for the one month ended January 31, 2010.
(2) During the nine months ended September 30, 2011 and year ended December 31, 2011, Dex One recognized a goodwill impairment charge of $801 million.

Dex One recognized a non-goodwill intangible asset impairment charge associated with trade names and trademarks, technology, local customer relationships and other from its former Business.com reporting unit of $22 million and a goodwill impairment charge of $1,137 million, for a total impairment charge of $1,159 million during the eleven months ended December 31, 2010.

The Predecessor Company recognized a non-goodwill intangible asset impairment charge of $7,338 million during the year ended December 31, 2009 associated with directory services agreements, advertiser relationships, third party contracts and network platforms acquired in prior acquisitions.

The Predecessor Company recognized a goodwill impairment charge of $3,124 million and non-goodwill intangible asset and other long-lived asset impairment charges totaling $746 million associated with local and national customer relationships and tradenames and technology acquired in prior acquisitions, for a total impairment charge of $3,870 million during the year ended December 31, 2008.

During the year ended December 31, 2007, the Predecessor Company recorded a non-goodwill intangible asset impairment charge of $20 million associated with tradenames acquired in a prior acquisition.

 

(3) On February 14, 2011, Dex One completed the sale of substantially all net assets of Business.com, including long-lived assets, domain names, trademarks, brands, intellectual property, related content and technology platform. As a result, Dex One recognized a gain on the sale of these assets of $13 million during the first quarter of 2011.
(4) During the nine months ended September 30, 2012, Dex One repurchased amounts outstanding under its amended and restated credit facilities and amounts outstanding under the Dex One senior subordinated notes below par, resulting in a gain on debt transactions of $140 million.

As a result of financing activities conducted during 2008, the Predecessor Company reduced its outstanding debt by $410 million and recorded a gain on debt transactions of $265 million during the year ended December 31, 2008.

During the year ended December 31, 2007, the Predecessor Company recorded a loss on debt transactions of $26 million associated with financing activities conducted during the fourth quarter of 2007.

 

(5) Reorganization items directly associated with the process of reorganizing the business under Chapter 11 have been recorded on a separate line item on the consolidated statement of operations. The Predecessor Company recorded $7,793 million of net reorganization items during the one month ended January 31, 2010 comprised of a $4,524 million gain on reorganization / settlement of liabilities subject to compromise and fresh start accounting adjustments of $3,269 million. For the year ended December 31, 2009, the Predecessor Company recorded $95 million of net reorganization items.
(6) Financial data for the year ended December 31, 2007 includes the results of Business.com commencing August 23, 2007.
(7) The significant decline in total assets and shareholders’ deficit as of December 31, 2009 and 2008 is a direct result of the impairment charges noted above. The significant decline in long-term debt, including current maturities, at December 31, 2009 is a direct result of the Predecessor Company’s senior notes, senior discount notes and senior subordinated notes, which were reclassed to liabilities subject to compromise on the consolidated balance sheet at December 31, 2009.

 

 

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SELECTED HISTORICAL FINANCIAL DATA OF SUPERMEDIA

The following table presents selected historical financial data for SuperMedia (the “Successor Company”) as of and for the years ended December 31, 2011 and 2010 and, because SuperMedia emerged from Chapter 11 on December 31, 2009, selected historical financial data for Idearc Inc. (the “Predecessor Company”) as of and for the years ended December 31, 2009, 2008 and 2007, which were derived from the Successor Company’s and Predecessor Company’s audited consolidated financial statements, respectively. The selected historical financial data as of and for the nine months ended September 30, 2012 and 2011 were derived from the Successor Company’s unaudited consolidated financial statements, which, in the opinion of SuperMedia’s management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results of the unaudited interim period. You should read this information in conjunction with SuperMedia’s consolidated financial statements and related notes at December 31, 2011 and December 31, 2010, for each of the three years in the period ended December 31, 2011, at September 30, 2012 and for the three and nine month periods ended September 30, 2012, which are contained in this document at Appendices M-O.

 

     Predecessor Company            Successor Company  
     Years Ended December 31,            Years Ended
December 31,
    Nine Months Ended
September 30,
 

(in millions, except per share data)

   2007      2008(1)      2009(2)            2010(3)     2011(4)     2011(5)     2012(6)  

Statements of Operations Data:

                      

Net revenue

   $ 3,189       $ 2,973       $ 2,512            $ 1,176      $ 1,642      $ 1,258      $ 1,042   

Impairment charges

     —           225         —                —          1,003        1,003        —     

Operating income (loss)

     1,343         926         741              (96     (596     (688     335   

Gain on debt transactions, net

     —           —           —                76        116        —          51   

Reorganization items, net

     —           —           8,035              (5     (2     (1     (1
  

 

 

    

 

 

    

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 429       $ 183       $ 8,257            $ (196   $ (771   $ (909   $ 178   
  

 

 

    

 

 

    

 

 

         

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (Loss) Per Share:

                      

Basic

   $ 2.94       $ 1.25       $ 56.32            $ (13.04   $ (51.04   $ (60.15   $ 11.36   

Diluted

   $ 2.94       $ 1.25       $ 56.32            $ (13.04   $ (51.04   $ (60.15   $ 11.36   

Cash Dividends Declared Per Common Share

     1.37         0.3425         —                —          —          —          —     

Shares Used in Computing Earnings (Loss) Per Share:

                      

Basic

     146.1         146.4         146.6              15.0        15.1        15.1        15.3   

Diluted

     146.1         146.4         146.6              15.0        15.1        15.1        15.3   

 

     Predecessor Company           Successor Company  
     As of December 31,           As of December 31,     As of September 30,  
      2007     2008(1)           2009(2)      2010(3)     2011(4)     2011(5)     2012(6)  

Balance Sheet Data:

                    

Total assets

   $ 1,667      $ 1,815           $ 3,834       $ 2,926      $ 1,633      $ 1,834      $ 1,444   

Long-term debt, including current maturities

     9,068        9,267             2,750         2,171        1,745        2,135        1,475   

Shareholders’ equity (deficit)

     (8,600     (8,491          200         (30     (788     (924     (470

 

(1) During 2008, the Predecessor Company recorded a non-goodwill intangible asset impairment charge of $225 million primarily related to the write down of Switchboard.com.

Due to the potential events of default resulting from noncompliance with certain covenants in the Predecessor Company’s debt agreements and the Predecessor Company’s expectation to restructure its

 

 

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capitalization under federal bankruptcy laws, its total outstanding debt of $9,267 million was classified as current maturities of long-term debt as of December 31, 2008.

 

(2) During 2009, the Predecessor Company entered and the Successor Company emerged from Chapter 11 bankruptcy. As required by U.S. generally accepted accounting principles (“GAAP”), the Successor Company adopted fresh start accounting effective December 31, 2009. The consolidated financial statements for the periods ended prior to December 31, 2009 do not include the effect of any changes in the Successor Company’s capital structure or changes in the fair value of assets and liabilities as a result of fresh start accounting. The results of operations of the Predecessor Company for the year ended December 31, 2009 include one-time reorganization items gains of $8,035 million, including a pre-emergence gain of $6,035 million resulting from the discharge of liabilities under the amended plan of reorganization, as well as a gain of $2,469 million associated with fresh start accounting adjustments. Additionally, goodwill of $1,707 million and $555 million of intangible assets were recorded in 2009 in connection with the Successor Company’s adoption of fresh start accounting. Upon emergence from bankruptcy, the Successor Company’s total outstanding debt of $2,750 million was classified as long-term.
(3) As required by fresh start accounting, at December 31, 2009, the balances of deferred revenue and deferred directory costs were adjusted to their fair value of zero, which had a significant non-cash impact on SuperMedia’s 2010 operating results. As a result, approximately $846 million of deferred revenue ($826 million net of estimated sales allowances) and $213 million of deferred directory costs were not recognized in SuperMedia’s 2010 consolidated statement of operations which would have otherwise been recorded by the Predecessor Company. In addition, SuperMedia’s 2010 operating results were significantly impacted by the exclusion of approximately $61 million of bad debt expense due to the exclusion of revenue associated with the implementation of fresh start accounting at December 31, 2009 that would have been recognized by the Predecessor Company. These non-cash fresh start adjustments impact only SuperMedia’s 2010 consolidated statement of operations and do not affect future years’ results. Likewise, these non-cash fresh start adjustments did not affect cash flows as client billing and collection activities remained unchanged.

During 2010, SuperMedia recorded $40 million of reduced operating expenses related to the favorable non-recurring, non-cash resolution of state operating tax claims.

For the year ended December 31, 2010, SuperMedia made cash debt payments of $500 million, which reduced SuperMedia’s debt obligations by $579 million. On December 23, 2010, SuperMedia paid $185 million to prepay senior secured term loans of $264 million at 70% of par. This transaction resulted in SuperMedia recording a $76 million gain ($79 million gain offset by $3 million in administrative fees associated with the transaction), which was recorded as early extinguishment of debt on SuperMedia’s 2010 consolidated statement of operations. For the year ended December 31, 2010, SuperMedia also made additional debt principal payments, at par, of $315 million.

 

(4) During 2011, SuperMedia recorded a non-cash goodwill impairment charge of $1,003 million ($997 million after-tax). This reduced SuperMedia’s goodwill balance from $1,707 million to $704 million.

For the year ended December 31, 2011, SuperMedia made cash debt payments of $308 million, which reduced SuperMedia’s debt obligations by $426 million. On December 14, 2011, SuperMedia utilized $117 million in cash to prepay $235 million of the senior secured term loans at a rate of 49.75% of par. This transaction resulted in SuperMedia recording a $116 million gain ($118 million gain offset by $2 million in administrative fees associated with the transaction), which was recorded as early extinguishment of debt on SuperMedia’s 2011 consolidated statement of operations. For the year ended December 31, 2011, SuperMedia also made additional debt principal payments, at par, of $191 million.

(5) During the nine months ended September 30, 2011, SuperMedia recorded a non-cash goodwill impairment charge of $1,003 million ($997 million after-tax). This reduced SuperMedia’s goodwill balance from $1,707 million to $704 million.

 

 

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(6) During the nine months ended September 30, 2012, SuperMedia made cash debt payments of $218 million, which reduced the Company’s debt obligations by $270 million. On May 5, 2012, SuperMedia utilized $33 million in cash to prepay $56 million of the senior secured term loans at a rate of 59% of par. On March 2, 2012, SuperMedia utilized $31 million in cash to prepay $60 million of the senior secured term loans at a rate of 52% of par. These transactions resulted in SuperMedia recording a $51 million non-taxable gain ($52 million gain offset by $1 million in administrative fees associated with the transactions), which was recorded as early extinguishment of debt on SuperMedia’s nine months ended September 30, 2012 consolidated statement of operations. For the nine months ended September 30, 2012, SuperMedia made additional debt principal payments, at par, of $154 million.

During the nine months ended September 30, 2012, SuperMedia amended its other post-employment benefit plans. The changes limit and/or eliminate Company subsidies associated with other post-employment benefits including medical, prescription drug, dental and life insurance coverage for retirees, certain employees and their respective dependents effective September 1, 2012. These plan amendments resulted in a pre-tax reduction of $257 million to employee benefit obligations and an after-tax deferred gain to accumulated other comprehensive income of $161 million. During the nine months ended September 30, 2012, SuperMedia recorded a $32 million credit to expense associated with the amortization of the deferred gain related to these plan amendments.

 

 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

We derived the following selected unaudited pro forma condensed combined financial information from Dex One and SuperMedia’s unaudited consolidated balance sheets as of September 30, 2012, audited consolidated statements of operations for the year ended December 31, 2011 and unaudited consolidated statements of operations for the nine months ended September 30, 2012. The following selected unaudited pro forma condensed combined financial information of Dex Media is presented for illustrative purposes only and gives effect to the transaction as if it had occurred on January 1, 2011 with respect to the selected unaudited pro forma condensed combined statements of operations data and as of September 30, 2012 with respect to the selected unaudited pro forma condensed combined balance sheet data. The following selected unaudited pro forma condensed combined financial information does not consider any potential impact resulting from the prepackaged plans. The historical consolidated financial statements of Dex One and SuperMedia have been adjusted to give effect to pro forma events that are (1) directly attributable to the transaction, (2) estimable and supportable and (3) with respect to the statement of operations, expected to have a continuing impact on the combined results. The following selected unaudited pro forma condensed combined financial information is not indicative of the financial results of the combined companies had the companies actually been combined at the beginning of each period presented, does not reflect the impact of possible business model changes or the costs of any integration activities or benefits that may result from the transaction and is not indicative of the results of operations in future periods or the future financial position of Dex Media. The following selected unaudited pro forma condensed combined financial information also does not consider any potential impacts of current market conditions on revenues, expense efficiencies, asset dispositions and share repurchases, among other factors. The following selected unaudited pro forma condensed combined financial information has been derived from and should be read in conjunction with the historical consolidated financial statements and related notes of Dex One and SuperMedia, which are contained or incorporated by reference in this document, and the other information contained or incorporated by reference in this document.

The following selected unaudited pro forma condensed combined financial information is preliminary, as the detailed valuation studies necessary to arrive at the required estimates of fair value of SuperMedia’s assets to be acquired and liabilities to be assumed and the related allocations of purchase price have not been finalized, nor have we identified all adjustments necessary to conform accounting policies. A final determination of the fair value of SuperMedia’s assets and liabilities will be based on the actual net tangible and intangible assets and liabilities of SuperMedia that exist as of the date of completion of the transaction and, therefore, a final determination cannot be made prior to the completion of the transaction. In addition, the final value of the consideration to be provided by Dex One to complete the transaction will be determined based on information at the time the transaction closes. Accordingly, the pro forma purchase price adjustments and allocations used in preparing the selected unaudited pro forma condensed combined financial information below are preliminary and are subject to further adjustments as additional information becomes available and as additional analyses are performed. Final pro forma purchase price adjustments and allocations may differ materially from the preliminary pro forma purchase price adjustments and allocations. See “Where You Can Find More Information” and “Unaudited Pro Forma Condensed Combined Financial Statements.”

 

(in millions, except per share data)

  Year Ended
December 31, 2011
    Nine Months Ended
September 30, 2012
 

Statements of Operations Data:

 

Net revenues

  $ 2,454      $ 2,041   

Operating income (loss)

    (1,454     474   

Net income (loss)

    (1,625     235   

Basic and diluted earnings (loss) per share

  $ (95.03   $ 13.74   

Balance Sheet Data:

 

Total assets

    N/A      $ 4,510   

Long-term debt, including current maturities

    N/A        2,999   

Shareholders’ equity

    N/A      $ 102   

 

(N/A) Selected unaudited pro forma balance sheet data as of December 31, 2011 is not applicable.

 

 

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UNAUDITED PRO FORMA COMPARATIVE PER SHARE DATA

The following unaudited pro forma comparative per share information table presents income (loss) from continuing operations per common share and book value per common share data separately for Dex One and SuperMedia (1) on a historical basis, (2) on an unaudited pro forma combined basis and (3) on an unaudited pro forma basis per Dex One equivalent common share and SuperMedia equivalent common share. The following unaudited pro forma comparative per share information table gives effect to the transaction and the associated equity capital investments using the acquisition method of accounting as if it had occurred on January 1, 2011 with respect to the unaudited pro forma income (loss) from continuing operations per common share data, and as of September 30, 2012 with respect to the unaudited pro forma book value per common share data. The following unaudited pro forma comparative per share information table does not consider any potential impact resulting from the prepackaged plans and does not indicate the financial results of the combined companies had the companies actually been combined at the beginning of each period presented, does not reflect the impact of possible business model changes or the costs of any integration activities or benefits that may result from the transaction, and is not indicative of the results of operations in future periods or the future financial position of Dex Media. The following unaudited pro forma comparative per share information table also does not consider any potential impacts of current market conditions on revenues, expense efficiencies, asset dispositions and share repurchases, among other factors. The following unaudited pro forma comparative per share information table has been derived from and should be read in conjunction with the historical consolidated financial statements and related notes of Dex One and SuperMedia, which are contained or incorporated by reference in this document, and the other information contained or incorporated by reference in this document.

The following unaudited pro forma comparative per share information table is preliminary and is subject to further adjustments as additional information becomes available and as additional analyses are performed. Accordingly, the actual unaudited pro forma comparative per share information table may differ materially from the preliminary unaudited pro forma comparative per share information table presented here. See “Where You Can Find More Information” and “Unaudited Pro Forma Condensed Combined Financial Statements.”

 

     Dex One
Historical
Per Share
Data (1)
    SuperMedia
Historical
Per Share
Data(1)
    Dex Media
Unaudited
Pro Forma
Combined(2)
    Per Equivalent
Dex One
Share(3)
    Per  Equivalent
SuperMedia
Share (4)
 

Loss from Continuing Operations Per Common Share for the Year Ended December 31, 2011:

          

Basic and diluted

   $ (10.35   $ (51.04   $ (95.03   $ (19.01   $ (41.68

Income from Continuing Operations Per Common Share for the Nine Months Ended September 30, 2012:

          

Basic

   $ 1.94      $ 11.36      $ 13.74      $ 2.75      $ 6.03   

Diluted

   $ 1.93      $ 11.36      $ 13.74      $ 2.75      $ 6.03   

Book Value Per Common Share:

          

As of December 31, 2011

   $ (0.20   $ (50.95     N/A        N/A        N/A   

As of September 30, 2012

   $ 1.81      $ (30.02   $ 5.96      $ 1.19      $ 2.61   

 

(1) The historical book value per common share is computed by dividing total shareholders’ equity (deficit) by the number of shares of common stock outstanding at the end of the period.
(2)

The pro forma income (loss) from continuing operations per common share of the combined company is computed by dividing the pro forma income (loss) from continuing operations by the pro forma weighted average number of shares outstanding. The pro forma book value per common share of the combined company is computed by dividing total pro forma shareholders’ equity by the pro forma number of shares of

 

 

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  common stock outstanding at the end of the period. Pro forma book value per common share as of December 31, 2011 is not applicable.
(3) Reflects Dex One shares at the Dex One Exchange Ratio of 0.2.
(4) Reflects SuperMedia shares at the SuperMedia Exchange Ratio of 0.4386.

 

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This document contains or incorporates by reference certain forward-looking statements, including statements about the financial condition, results of operations, earnings outlook and prospects of each of Dex One and SuperMedia, whether and when the transaction will be completed, and the benefits of combination of Dex One and SuperMedia, which are subject to numerous assumptions, risks and uncertainties. These forward-looking statements are found at various places throughout this document, including in the section entitled “Risk Factors.” You can find many of these statements by looking for words such as “plan,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “potential,” “possible” or other similar expressions. Actual results could differ materially from those contained or implied by such statements for a variety of factors, including:

 

   

the continuing decline in the use of print directories;

 

   

increased competition, particularly from existing and emerging digital technologies;

 

   

ongoing weak economic conditions and continued decline in advertising sales;

 

   

Dex One’s and SuperMedia’s abilities to collect trade receivables from customers to whom they extend credit;

 

   

Dex One’s and SuperMedia’s abilities to generate sufficient cash to service their debt;

 

   

Dex One’s and SuperMedia’s abilities to comply with the financial covenants contained in their respective credit facilities and the potential impact to operations and liquidity as a result of restrictive covenants in such credit facilities;

 

   

Dex One’s and SuperMedia’s abilities to refinance or restructure their debt on reasonable terms and conditions as might be necessary from time to time, including without limitation, obtaining approval of Dex One’s senior secured creditors and SuperMedia’s senior secured creditors with respect to financing amendments required under the merger agreement;

 

   

increasing interest rates;

 

   

changes in the companies’ and the companies’ subsidiaries’ credit ratings;

 

   

changes in accounting standards;

 

   

regulatory changes and judicial rulings impacting the companies’ businesses;

 

   

adverse results from litigation, governmental investigations or tax related proceedings or audits;

 

   

the effect of labor strikes, lock-outs and negotiations;

 

   

successful realization of the expected benefits of acquisitions, divestitures and joint ventures;

 

   

Dex One’s and SuperMedia’s abilities to maintain agreements with major internet search and local media companies;

 

   

Dex One’s and SuperMedia’s reliance on third-party vendors for various services;

 

   

other events beyond our control that may result in unexpected adverse operating results;

 

   

the ability of Dex One and SuperMedia to consummate the transaction on the terms set forth in the merger agreement;

 

   

the risk that anticipated cost savings, growth opportunities and other financial and operating benefits as a result of the transaction may not be realized or may take longer to realize than expected;

 

   

the risk that benefits from the transaction may be significantly offset by costs incurred in integrating the companies;

 

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potential adverse impacts or delay in completing the transaction as a result of obtaining consents from lenders to Dex One or SuperMedia;

 

   

failure to receive the approval of the stockholders of either Dex One or SuperMedia for the transaction;

 

   

difficulties in connection with the process of integrating Dex One and SuperMedia, including: coordinating geographically separate organizations; integrating business cultures, which could prove to be incompatible; difficulties and costs of integrating information technology systems; and the potential difficulty in retaining key officers and personnel;

 

   

if required, the ability of Dex One and SuperMedia to consummate the transaction on the terms set forth in the prepackaged plans;

 

   

obtaining the approval of each of Dex One’s and SuperMedia’s board of directors to authorize the commencement of the respective Chapter 11 cases;

 

   

the risks related to the impact any Chapter 11 cases and the prepackaged plans could have on Dex One’s and SuperMedia’s business operations, financial condition, liquidity or cash flow;

 

   

the possibility that the Bankruptcy Court does not confirm the prepackaged plans or requires a re-solicitation of votes;

 

   

the risks related to other parties objecting to the prepackaged plans and the resulting cost and expenses of delays in any Chapter 11 cases; and

 

   

risks that if the transaction is consummated through Chapter 11 cases, each of Dex One and SuperMedia will incur significant, non-recurring costs in connection with the administration of the bankruptcy cases.

In light of these assumptions, risks and uncertainties, the results anticipated by the forward-looking statements contained in this document or made by representatives of Dex One or SuperMedia may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof or, in the case of statements incorporated by reference, on the date of the document incorporated by reference, or, in the case of statements made by representatives of Dex One or SuperMedia, on the date those statements are made. All subsequent written and oral forward-looking statements concerning the transaction or Dex Media or other matters addressed in this document and attributable to Dex One or SuperMedia or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. All forward-looking statements included in this document are based on information available at the time of the document. Except to the extent required by applicable law or regulation, neither Dex One nor SuperMedia assumes any obligation to update any forward-looking statement.

For additional information about factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements, please see the reports that Dex One and SuperMedia have filed with the SEC as described under “Where You Can Find More Information.”

 

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RISK FACTORS

In addition to the other information included in and incorporated by reference into this document, including the risk factors and other information set forth in the Annual Report on Form 10-K of Dex One for the fiscal year ended December 31, 2011 and the matters addressed in “Cautionary Statement Regarding Forward-Looking Statements,” you should carefully consider the following risk factors before deciding whether to vote for the approval and adoption of the merger agreement and the transactions it contemplates or the prepackaged plans, as applicable. For further discussion of these and other risk factors, please see Dex One’s and SuperMedia’s periodic reports and the documents incorporated by reference into this document. See “Where You Can Find More Information.” If any of the risks described below or in the periodic reports and other documents incorporated by reference into this document actually materialize, the businesses, financial condition, results of operations, prospects or stock prices of Dex One, SuperMedia or Dex Media could be materially adversely affected.

Risk Factors Relating to the Merger

The exchange ratios are fixed and will not be adjusted in the event of any change in either Dex One’s or SuperMedia’s stock price.

Upon the closing of the transaction, whether consummated out of court or through Chapter 11 cases, each share of Dex One common stock will be converted into 0.2 shares of Dex Media common stock and each share of SuperMedia common stock will be converted into the right to receive 0.4386 shares of Dex Media common stock. These exchange ratios will not be adjusted for changes in the market price of either Dex One or SuperMedia common stock between the signing of the merger agreement and the completion of the transaction. Changes in the prices of Dex One common stock and SuperMedia common stock will affect the value of the Dex Media common stock that Dex One stockholders and SuperMedia stockholders, respectively, will receive in the transaction.

Dex One and SuperMedia stockholders cannot be sure of the market value of the shares of Dex Media common stock to be issued upon completion of the transaction.

Dex One stockholders and SuperMedia stockholders will each receive a fixed number of shares of Dex Media common stock in the transaction. The market values of Dex One common stock and SuperMedia common stock at the time of the completion of the transaction may vary significantly from their prices on the date the merger agreement was executed, the date of this document, the date on which Dex One stockholders and SuperMedia stockholders vote on the transaction or the date on which the Dex One and SuperMedia prepackaged plans become effective. Because the respective exchange ratios will not be adjusted to reflect any changes in the market prices of Dex One common stock or SuperMedia common stock, the market value of the Dex Media common stock issued in the transaction and the Dex One common stock and SuperMedia common stock surrendered in the transaction may be higher or lower than the values of these shares on earlier dates. 100% of the transaction consideration to be received by both Dex One stockholders and SuperMedia stockholders will be Dex Media common stock.

Changes in the market prices of Dex One common stock and SuperMedia common stock may result from a variety of factors that are beyond the control of Dex One or SuperMedia, including changes in their businesses, operations and prospects, regulatory considerations, governmental actions and legal proceedings and developments. Market assessments of the benefits of the transaction, the likelihood that the transaction will be completed and general and industry-specific market and economic conditions may also have an effect on the market price of Dex One common stock and SuperMedia common stock. Changes in market prices of SuperMedia common stock and Dex One common stock may also be caused by fluctuations and developments affecting domestic and global securities markets. Neither Dex One nor SuperMedia is permitted to terminate the merger agreement solely because of changes in the market price of either party’s respective common stock.

 

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In addition, the transaction may not be completed until a significant period of time has passed after the voting deadline to approve the transaction with respect to other closing conditions in the merger agreement or the prepackaged plans. As a result, the market values of Dex One common stock or SuperMedia common stock may vary significantly from the date of the voting deadline to the date of the completion of the transaction. You are urged to obtain up-to-date prices for Dex One common stock and SuperMedia common stock. There can be no assurance that the transaction will be completed, that there will not be a delay in the completion of the transaction or that all or any of the anticipated benefits of the transactions will be obtained. See “Comparative Per Share Market Price and Dividend Information” for ranges of historic prices of Dex One common stock and SuperMedia common stock.

Failure to successfully combine the businesses of Dex One and SuperMedia or failure to do so in the expected time frame may adversely affect Dex Media’s future results.

The success of the transaction will depend, in part, on Dex Media’s ability to realize the anticipated benefits from combining the businesses of Dex One and SuperMedia. To realize these anticipated benefits, the businesses of Dex One and SuperMedia must be successfully combined. Historically, Dex One and SuperMedia have been independent companies, and they will continue to be operated as such until the completion of the transaction. The management of Dex Media may face significant challenges in consolidating the functions of SuperMedia and Dex One, integrating the technologies, organizations, procedures, policies and operations of the two companies, as well as addressing the different business cultures at the two companies and retaining key personnel. If Dex One and SuperMedia do not successfully integrate their business operations, the anticipated benefits of the transaction may not be realized fully or at all or may take longer to realize than expected. The integration may also be complex and time consuming and require substantial resources and effort. The integration process and other disruptions resulting from the transaction may also disrupt each company’s ongoing businesses and/or adversely affect our relationships with employees, regulators and others with whom we have business or other dealings. There can be no assurance that Dex Media will be able to accomplish this integration process smoothly or successfully. In addition, the integration of certain operations following the transaction will require the dedication of significant management resources, which will compete for management’s attention with its efforts to manage the day-to-day business of Dex Media. Even if Dex One and SuperMedia are able to integrate their business operations successfully, there can be no assurance that this integration will result in the realization of the full benefits of synergies, cost savings, growth and operational efficiencies that may be possible from this integration, or that these benefits will be achieved within a reasonable period of time. Any inability to realize the full extent of, or any of, the anticipated cost savings and financial benefits of the transaction, as well as any delays encountered in the integration process, could have an adverse effect on the business and results of operations of Dex Media, which may affect the market price of Dex Media common stock.

Dex One and SuperMedia will be subject to business uncertainties and contractual restrictions while the transaction is pending.

Uncertainty about the effect of the transaction on employees and customers may have an adverse effect on Dex One or SuperMedia and consequently on Dex Media. These uncertainties may impair Dex One’s or SuperMedia’s ability to retain and motivate key personnel and could cause customers and others that deal with Dex One or SuperMedia to defer entering into contracts with Dex One or SuperMedia or making other decisions concerning Dex One or SuperMedia or seek to change existing business relationships with Dex One or SuperMedia. Certain of Dex One’s or SuperMedia’s commercial contracts contain change of control restrictions that may give rise to a right of termination or cancellation in connection with the transaction. In addition, if key employees depart because of uncertainty about their future roles and the potential complexities of the transaction, SuperMedia’s and Dex One’s businesses could be harmed. In addition, the merger agreement restricts Dex One and SuperMedia from making certain acquisitions and taking other specified actions until the transaction occurs without the consent of the other party. These restrictions may prevent Dex One and SuperMedia from pursuing attractive business opportunities that may arise prior to the completion of the transaction.

 

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The merger agreement limits Dex One’s and SuperMedia’s ability to pursue alternatives to the transaction.

Each of Dex One and SuperMedia has agreed that it will not, among other things, solicit, initiate, encourage or facilitate, or engage in discussions, negotiations or agreements regarding, proposals to acquire 10% or more of the stock or assets of Dex One or SuperMedia, subject to limited exceptions, including that a party may take certain actions in the event it receives an unsolicited acquisition proposal that constitutes a superior proposal or is reasonably expected to lead to a superior proposal, and the party’s board of directors determines in good faith, after consultation with its outside legal counsel and financial advisor, that a failure to take action with respect to such takeover proposal would be inconsistent with its duties under applicable law. Each party has also agreed that its board of directors will not change its recommendation to its stockholders or approve any alternative agreement, subject to limited exceptions, including that, at any time prior to the applicable stockholder approval, the applicable board of directors may make a change in recommendation of the transaction if such board concludes in good faith, after consultation with its outside legal counsel and financial advisor, that (1) the failure to take such action would be inconsistent with its duties under applicable laws, (2) if requested by the other party, its representatives shall have negotiated in good faith with the other party for three business days and (3) if such change in recommendation is related to an alternative acquisition proposal, that such proposal constitutes a superior proposal.

Members of both Dex One’s and SuperMedia’s management and certain directors have interests in the transaction that are different from, or in addition to, your interests.

Executive officers of Dex One and SuperMedia negotiated the terms of the merger agreement, and the Dex One and SuperMedia boards approved the transaction and recommended that their respective stockholders vote to approve and adopt the merger agreement and related transactions or, in the alternative, the prepackaged plans. In considering these facts and the other information contained in this document, you should be aware that some members of both Dex One’s and SuperMedia’s management and certain members of their boards have economic interests in the transaction that are different from, or in addition to, the interests of Dex One stockholders and SuperMedia stockholders generally. These interests include, among others, continued service as a director or an executive officer of Dex Media, ownership interests in Dex Media and the accelerated vesting of certain equity awards and/or certain severance benefits, in connection with the transaction. These interests, among others, may influence the directors and executive officers of Dex One and SuperMedia to support or approve the transaction. In addition, some directors of each of Dex One and SuperMedia are associated with stockholders who are also debtholders of each of Dex One and SuperMedia, and therefore may have interests relating to the debt that are different from those relating to the equity. Please see “Proposal 1: The Transaction — Interests of Certain Persons in the Transaction” for information about these economic interests.

Both Dex One stockholders and SuperMedia stockholders will have a reduced ownership and voting interest after the transaction and will exercise less influence over management.

After the completion of the transaction, the Dex One stockholders and SuperMedia stockholders will own a smaller percentage of Dex Media than they currently own of Dex One and SuperMedia, respectively. Upon completion of the transaction, it is anticipated that Dex One stockholders and SuperMedia stockholders will hold approximately 60% and 40%, respectively, of the shares of common stock of Dex Media issued and outstanding immediately after the consummation of the transaction. Consequently, Dex One stockholders, as a group, and SuperMedia stockholders, as a group, will each have reduced ownership and voting power in Dex Media compared to their current ownership and voting power in Dex One and SuperMedia, respectively. In particular, SuperMedia stockholders, as a group, will have less than a majority of the ownership and voting power of Dex Media and, therefore, will be able to exercise less collective influence over the management and policies of Dex Media than they currently exercise over the management and policies of SuperMedia.

 

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Dex One and SuperMedia may be unable to obtain in the anticipated timeframe, or at all, the necessary consents to the transaction from their respective senior secured creditors and the necessary amendments to their respective credit facilities.

Completion of the transaction is contingent upon, among other things, each of Dex One and SuperMedia reaching an agreement in a manner acceptable to each of Dex One and SuperMedia with (a) 100% of their senior secured creditors to consummate the transaction out of court or (b) with respect to each of Dex One’s senior secured credit facilities and SuperMedia’s senior secured credit facility, at least 50% of each of their respective senior secured creditors of those who vote for or against the relevant prepackaged plan and at least 2/3 in amount of their respective senior secured creditors of those who vote for or against the relevant prepackaged plan to consummate the transaction in Chapter 11 cases. Dex One and SuperMedia can provide no assurance that the necessary financing amendments will be entered into. In addition, Dex One and SuperMedia can provide no assurance that any amendments to their respective credit facilities will not contain terms, conditions or restrictions that would be detrimental to the combined company following the transaction. See “Description of Certain Indebtedness” for more information.

The support of certain secured creditors of Dex One and SuperMedia for the necessary amendments to the applicable credit facilities is subject to the terms of support agreements between Dex One and certain of its secured creditors and SuperMedia and certain of its secured creditors, which are subject to termination.

Dex One and SuperMedia have entered into support agreements with certain of their respective senior secured creditors. These support agreements provide, among other things, that the creditor parties will support the amendments to the Dex One or SuperMedia credit facilities and the Dex One or SuperMedia prepackaged plan, as applicable and will support the waiver of certain rights under the various credit agreements. The execution of the support agreements by those secured creditors is not a guarantee that the proposed financing amendments will become effective. As of the date of this filing, an insufficient number of creditors are party to the support agreement to cause the proposed financing amendments to be effective in an out of court process, and there is no assurance that Dex One or SuperMedia will ever obtain the support of the requisite numbers of creditors to do so. In addition, these support agreements are subject to automatic termination upon the occurrence of certain events, and to termination upon 10 business days’ notice (subject to cure) upon the occurrence of certain other events, including the failure to deliver definitive loan documents within a certain timeframe and the failure of this registration statement to be declared effective within a specified timeframe. If these support agreements are terminated, the senior secured lenders of Dex One or SuperMedia will have no obligation to support the financing amendments to the Dex One or SuperMedia credit facilities, as applicable, either through an out of court transaction or through a Chapter 11 process. The transaction will not be consummated if the financing amendments are not approved. See “The Prepackaged Plans—The Dex One Prepackaged Plan—The Dex One Support Agreement” and “The Prepackaged Plans—The SuperMedia Prepackaged Plan—The SuperMedia Support Agreement.”

Dex One, SuperMedia and Dex Media will incur significant transaction and transaction-related transition costs in connection with the transaction.

Dex One and SuperMedia expect that they and Dex Media will incur significant, non-recurring costs in connection with consummating the transaction and integrating the operations of the two companies. Dex One and SuperMedia may incur additional costs to maintain employee morale and to retain key employees. Dex One and SuperMedia will also incur significant fees and expenses relating to amending existing credit facilities and legal, accounting and other transaction fees and other costs associated with the transaction. Some of these costs are payable regardless of whether the transaction is completed. Upon termination of the merger agreement under specified circumstances, Dex One or SuperMedia may be required to pay the other party an expense reimbursement of up to a maximum amount of $7.5 million. Additionally, if the transaction is consummated through Chapter 11 cases, each of Dex One and SuperMedia will incur significant, non-recurring costs in connection with the administration of the bankruptcy cases.

 

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Unaudited pro forma financial information included in this document may not be indicative of Dex Media’s actual financial position or results of operations.

The unaudited pro forma financial information in this document is presented for illustrative purposes only and is not necessarily indicative of what Dex Media’s actual financial position or results of operations would have been had the transaction been completed on the dates indicated. The unaudited pro forma financial information reflects adjustments, which are based upon preliminary estimates, to allocate the purchase price to SuperMedia’s net assets. The purchase price allocation reflected in this document is preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of SuperMedia as of the date of the completion of the transaction. In addition, subsequent to the closing date, there may be further refinements of the purchase price allocation as additional information becomes available. Accordingly, the final purchase accounting adjustments may differ materially from the pro forma adjustments reflected in this document. See “Dex One and SuperMedia Unaudited Pro Forma Condensed Combined Financial Information” for more information.

Dex One, SuperMedia and, subsequently, Dex Media must continue to retain, motivate and recruit executives and other key employees, which may be difficult in light of uncertainty regarding the transaction, and failure to do so could negatively affect Dex Media.

For the transaction to be successful, during the period before the transaction is completed, both Dex One and SuperMedia must continue to retain, motivate and recruit executives and other key employees. Moreover, Dex Media must be successful at retaining and motivating key employees following the completion of the transaction. Experienced employees at both Dex One and SuperMedia are in high demand and competition for their talents can be intense. Employees of both Dex One and SuperMedia may experience uncertainty about their future roles with Dex Media until, or even after, strategies with regard to Dex Media are announced or executed. The potential distractions of the transaction may adversely affect the ability of Dex One, SuperMedia or, following completion of the transaction, Dex Media to retain, motivate and recruit executives and other key employees and keep them focused on applicable strategies and goals. A failure by Dex One, SuperMedia or, following the completion of the transaction, Dex Media to attract, retain and motivate executives and other key employees during the period prior to or after the completion of the transaction could have a negative impact on the businesses of Dex One, SuperMedia or Dex Media.

The market price for shares of Dex Media common stock may be affected by factors different from those affecting the market price for shares of SuperMedia common stock and Dex One common stock.

Upon completion of the transaction, holders of SuperMedia common stock and Dex One common stock will become holders of Dex Media common stock. The results of operations of Dex Media, as well as the market price of Dex Media common stock, may be affected by factors different from those currently affecting the results of operations and stock prices of SuperMedia and Dex One, including differences in stockholder composition, differences in Dex One’s and SuperMedia’s businesses and differences in Dex One’s and SuperMedia’s assets and capitalizations.

Upon the consummation of the transaction, the Dex Media certificate of incorporation will include transfer restrictions on the Dex Media common stock, and, if the transaction is consummated through Chapter 11 cases, the Dex Media certificate of incorporation will include restrictions prohibiting the issuance of non-voting equity securities.

The merger agreement provides that, upon the consummation of the transaction, the Dex Media certificate of incorporation will include specific transfer restrictions on the Dex Media common stock to reduce the possibility of certain ownership changes occurring before or after the merger of Merger Sub with and into SuperMedia. These restrictions could impair the ability of certain stockholders to freely transfer shares of Dex Media common stock after the completion of the transaction. In addition, if the transaction is consummated through Chapter 11 cases, the Dex Media certificate of incorporation will also include a provision prohibiting the issuance of non-voting equity securities to the extent necessary to satisfy the requirements of the Bankruptcy Code.

 

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The shares of Dex Media common stock to be received by Dex One stockholders and SuperMedia stockholders as a result of the transaction will have different rights from the shares of Dex One common stock and SuperMedia common stock.

Upon the completion of the transaction, both Dex One stockholders and SuperMedia stockholders will become Dex Media stockholders and their rights as stockholders will be governed by the certificate of incorporation and bylaws of Dex Media. The rights associated with both Dex One common stock and SuperMedia common stock are different from the rights associated with Dex Media common stock. In particular, there may be certain stock transfer restrictions on the Dex Media common stock, which will take effect upon the completion of the transactions, which may help reduce, but not eliminate, the risk of unfavorable ownership changes. Please see “Comparison of Rights of Dex One, SuperMedia and Dex Media Stockholders” for a discussion of the material differences in the rights associated with Dex Media common stock as compared to Dex One and SuperMedia common stock.

Failure to complete the transaction could negatively impact Dex One and SuperMedia.

If the transaction is not completed, the ongoing businesses of Dex One and SuperMedia may be adversely affected and there may be various consequences, including:

 

   

the adverse impact to the business of each party caused by the failure to pursue other beneficial opportunities due to the focus on the transaction, without realizing any of the anticipated benefits of the transaction;

 

   

the incurrence of substantial costs by each party in connection with the transaction, without realizing any of the anticipated benefits of the transaction;

 

   

if the merger agreement is terminated under certain circumstances, the payment by one party to the other party of an expense reimbursement of up to $7.5 million;

 

   

a negative impact on the market price of the common stock of Dex One and/or SuperMedia;

 

   

the possibility, for each of Dex One and SuperMedia, of being unable to repay indebtedness when due and payable; and

 

   

Dex One and SuperMedia pursuing Chapter 11 or Chapter 7 proceedings resulting in recoveries for creditors and stockholders that are less than contemplated under the prepackaged plans or resulting in no recovery for certain creditors and stockholders.

Satisfying the conditions to, and completion of, the transaction may take longer than, and could cost more than, Dex One and SuperMedia expect. Any delay in completing, or any additional conditions imposed in order to complete, the transaction may materially and adversely affect the synergies and other benefits that Dex One and SuperMedia expect to achieve from the transaction and the integration of their respective businesses.

The transaction is subject to a number of conditions beyond Dex One’s and SuperMedia’s control that may prevent, delay or otherwise materially adversely affect its completion. We cannot predict when or whether these conditions will be satisfied. Furthermore, the requirements for obtaining any required regulatory clearances and approvals could delay the completion of the transaction for a significant period of time or prevent it from occurring altogether. Any delay in completing the transaction could cause the combined company not to realize some or all of the synergies that we expect to achieve if the transaction is successfully completed in the expected time frame. See “The Merger Agreement – Conditions to Completion of the Transaction.”

The transaction may not qualify as a tax-free reorganization within the meaning of Section 368(a) of the Code

If the transaction is consummated, either out of court or through Chapter 11 cases, the parties intend that the SuperMedia merger be treated as a “reorganization” within the meaning of Section 368(a) of the Code. However,

 

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such treatment is not free from doubt. In March of 2005, the Internal Revenue Service issued proposed regulations which, if finalized in their current form, would cause the merger to be a fully taxable transaction. The proposed regulations purport to resolve an uncertainty under current law and would generally require that there be an “exchange of net value” in order for a transaction to qualify as a reorganization. In the context of a reverse triangular merger, the exchange of net value requirement in the proposed regulations is not met where the liabilities of the corporation whose stock is surrendered in the exchange (in this case, SuperMedia) are in excess of its assets. In the absence of conclusive authority requiring that there be an exchange of net value in order for a transaction to qualify as a reorganization, Dex One and SuperMedia intend to take the position that the SuperMedia merger be treated as a reorganization. No opinion from legal counsel has been given regarding whether the Dex One or SuperMedia merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and neither Dex One nor SuperMedia have requested, nor do they intend to request, a ruling from the Internal Revenue Service regarding the U.S. federal income tax consequences of the transaction. As a result, there can be no assurance that the Internal Revenue Service will not assert, or that a court would not sustain, a position contrary to the parties intended treatment of the SuperMedia merger. SuperMedia stockholders should consult their own tax advisers regarding the possible treatment of the SuperMedia merger as a fully taxable transaction. In general, you should also read “Material United States Federal Income Tax Consequences of the Transaction” for a more complete discussion of the U.S. federal income tax consequences of the transaction. Tax matters can be complicated and the tax consequences of the transaction to you will depend on your particular tax situation. We urge you to consult your tax advisor to determine the tax consequences of the transaction to you.

Risk Factors Relating to the Combined Company Following the Transaction

The failure to successfully integrate the businesses of Dex One and SuperMedia in the expected timeframe would adversely affect Dex Media’s future results following the transaction.

The transaction involves the integration of two companies that have previously operated independently. The success of the transaction will depend, in large part, on the ability of Dex Media following the transaction to realize the anticipated benefits, including synergies, cost savings, innovation and operational efficiencies, from combining the businesses of Dex One and SuperMedia. To realize these anticipated benefits, the businesses of Dex One and SuperMedia must be successfully integrated. This integration will be complex and time-consuming. The failure to integrate successfully and to manage successfully the challenges presented by the integration process may result in Dex Media not achieving the anticipated benefits of the transaction.

Potential difficulties that may be encountered in the integration process include the following:

 

   

the inability to successfully integrate the businesses of Dex One and SuperMedia in a manner that permits Dex Media to achieve the full revenue and cost savings anticipated to result from the transaction;

 

   

complexities associated with managing the larger, more complex, combined business;

 

   

integrating personnel from the two companies while maintaining focus on providing consistent, high-quality products and services;

 

   

potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the merger;

 

   

performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by completing the merger and integrating the companies’ operations; and

 

   

the disruption of, or the loss of momentum in, each company’s ongoing business or inconsistencies in standards, controls, procedures and policies.

Any of these difficulties in successfully integrating the businesses of Dex One and SuperMedia, or any delays in the integration process, could adversely affect Dex Media’s ability to achieve the anticipated benefits of the transaction and could adversely affect Dex Media’s business, financial results, financial condition and stock

 

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price. Even if Dex Media is able to integrate the business operations of Dex One and SuperMedia successfully, there can be no assurance that this integration will result in the realization of the full benefits of synergies, cost savings, innovation and operational efficiencies that Dex One and SuperMedia currently expect from this integration or that these benefits will be achieved within the anticipated time frame.

The future results of Dex Media will suffer if Dex Media does not effectively manage its expanded operations following the transaction.

Following the transaction, the size of Dex Media’s business will increase significantly beyond the current size of either Dex One’s or SuperMedia’s business. Dex Media’s future success depends, in part, upon its ability to manage this expanded business, which will pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. There can be no assurances that Dex Media will be successful or that it will realize the expected operating efficiencies, cost savings, revenue enhancements and other benefits currently anticipated from the transaction.

Dex Media is expected to incur substantial expenses related to the merger and the integration of Dex One and SuperMedia.

Dex Media is expected to incur substantial expenses in connection with the transaction and the integration of Dex One and SuperMedia. There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including information technology purchasing, accounting and finance, sales, billing, payroll, pricing, revenue management, marketing and benefits. While Dex One and SuperMedia have assumed that a certain level of expenses would be incurred, there are many factors beyond their control that could affect the total amount or the timing of the integration expenses. Moreover, many of the expenses that will be incurred are, by their nature, difficult to estimate accurately. These expenses could, particularly in the near term, exceed the savings that Dex Media expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings. These integration expenses likely will result in Dex Media taking significant charges against earnings following the completion of the transaction, and the amount and timing of such charges are uncertain at present.

Uncertainty about the merger and diversion of management could harm Dex Media following the transaction.

The transaction could result in current and prospective employees experiencing uncertainty about their future with Dex Media following the transaction. These uncertainties may impair the ability of Dex Media to retain, recruit or motivate key personnel. In addition, completion of the transaction and integrating the companies’ operations will require a significant amount of time and attention from management of the two companies. The diversion of management’s attention away from ongoing operations could adversely affect business relationships of Dex Media following the transaction.

Dex Media will have substantial indebtedness following the transaction that could adversely affect its business, prospects, financial condition, results of operations and cash flow.

Dex Media will have a significant amount of indebtedness following the transaction. Dex Media’s substantial level of indebtedness increases the risk that it may be unable to generate cash sufficient to pay amounts due in respect of its indebtedness. Dex Media’s substantial indebtedness could have other important consequences to you and significant effects on Dex Media’s business and prospects. For example, it could:

 

   

Increase Dex Media’s vulnerability to adverse changes in general economic, industry and competitive conditions;

 

   

Require Dex Media to dedicate a substantial portion of its cash flow from operations to make payments on its indebtedness, thereby reducing the availability of its cash flow to fund working capital, capital expenditures and other general corporate purposes;

 

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Limit Dex Media’s flexibility in planning for, or reacting to, changes in its business and the industry in which it operates;

 

   

Restrict Dex Media from exploiting business opportunities;

 

   

Make it more difficult to satisfy Dex Media’s financial obligations, including payments on its indebtedness;

 

   

Place Dex Media at a disadvantage compared to its competitors that have less debt; and

 

   

Limit Dex Media’s ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of its business strategy or other general corporate purposes.

In addition, the amended and restated Dex One credit facilities, the amended and restated SuperMedia credit facility, Dex One’s senior subordinated notes, and the agreements evidencing or governing other future indebtedness may contain restrictive covenants that will limit Dex Media’s ability to engage in activities that may be in its long-term best interests. Dex Media’s failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of its indebtedness.

The amended and restated Dex One and SuperMedia credit facilities and the Dex One senior subordinated notes will restrict Dex Media’s future operations, particularly its ability to respond to changes or to take certain actions, after the consummation of the transaction.

The amended and restated Dex One and SuperMedia credit facilities and the Dex One senior subordinated notes will impose significant operating and financial restrictions and will limit Dex Media and its subsidiaries’ ability to, among other things:

 

   

Incur liens or other encumbrances;

 

   

Make acquisitions, loans and investments;

 

   

Sell or otherwise dispose of assets;

 

   

Incur additional indebtedness;

 

   

Pay dividends, make distributions and pay certain indebtedness;

 

   

Enter into sale and leaseback tractions; and

 

   

Enter into swap transactions and certain affiliate transactions.

In addition, under the amended and restated Dex One and SuperMedia credit facilities, Dex Media will be required to maintain specified financial ratios and satisfy other financial condition tests. The terms of any future indebtedness Dex Media may incur could include more restrictive covenants. There can be no assurance that Dex Media will be able to maintain compliance with these covenants in the future and, if it fails to do so, that Dex Media will be able to obtain waivers from its senior secured creditors and/or amend the covenants.

A failure by Dex Media to comply with the covenants or to maintain the required financial ratios contained in the agreements governing its indebtedness could result in an event of default under such indebtedness, which could adversely affect Dex Media’s ability to respond to changes in its business and manage its operations. Additionally, a default by Dex Media under one agreement covering Dex Media’s indebtedness may trigger cross-defaults under other agreements covering its indebtedness. Upon the occurrence of an event of default or cross-default under any of the agreements governing Dex Media’s indebtedness, the lenders could elect to declare all amounts outstanding to be due and payable and exercise other remedies as set forth in the agreements.

 

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If any of Dex Media’s indebtedness was to be accelerated, there can be no assurance that its assets would be sufficient to repay this indebtedness in full, which could have a material adverse effect on Dex Media’s ability to continue to operate as a going concern.

To service its indebtedness, Dex Media will require a significant amount of cash.

Dex Media’s ability to generate cash depends on many factors beyond its control, and any failure to meet its debt service obligations could harm its business, financial condition and results of operations. Dex Media’s ability to make payments on and to refinance its indebtedness and to fund working capital needs and planned capital expenditures will depend on Dex Media’s ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, business, legislative, regulatory and other factors that are beyond its control.

If Dex Media’s business does not generate sufficient cash flow from operations or if future borrowings are not available to it in an amount sufficient to enable Dex Media to pay its indebtedness or to fund Dex Media’s other liquidity needs, Dex Media may need to refinance all or a portion of its indebtedness on or before the maturity thereof, sell assets, reduce or delay capital investments or seek to raise additional capital, any of which could have a material adverse effect on its operations. In addition, Dex Media may not be able to affect any of these actions, if necessary, on commercially reasonable terms or at all. Dex Media’s ability to restructure or refinance its indebtedness will depend on the condition of the capital markets and Dex Media’s financial condition at such time. Any refinancing of Dex Media’s debt could be at higher interest rates and may require it to comply with more onerous covenants, which could further restrict Dex Media’s business operations. The terms of existing or future debt instruments may limit or prevent Dex Media from taking any of these actions. In addition, any failure to make scheduled payments of interest and principal on Dex Media’s outstanding indebtedness would likely result in a reduction of its credit rating, which could harm Dex Media’s ability to incur additional indebtedness on commercially reasonable terms or at all. Dex Media’s inability to generate sufficient cash flow to satisfy its debt service obligations, or to refinance or restructure its obligations on commercially reasonable terms or at all, would have an adverse effect, which could be material, on Dex Media’s business, financial condition and results of operations, as well as on its ability to satisfy its obligations in respect of the amended and restated Dex One and SuperMedia credit facilities and the Dex One senior subordinated notes.

Dex Media’s ability to use Dex One’s net operating loss carryforwards to offset future taxable income may become limited as a result of the transaction or future transactions in Dex Media’s stock.

As of September 30, 2012, Dex One had net operating loss carryforwards for U.S. federal income tax purposes of approximately $1.0 billion. Under Sections 382 and 383 of the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research tax credits, to offset its post-change income and taxes may be limited. In general, an “ownership change” occurs if there is a cumulative change in ownership by “5-percent shareholders” (within the meaning of Section 382) that exceeds 50 percentage points over a rolling three-year period. If a corporation has a “net unrealized built-in gain” (a “NUBIG”), generally meaning that, immediately before an ownership change, the fair market value of its assets exceeds the aggregate tax basis of its assets, then the limitation described above is generally increased for the first five years after the change date by the amount of recognized built-in gain during a post-change year (but not cumulatively to exceed the NUBIG). The SuperMedia merger pursuant to the transaction (consummated out of court or in Chapter 11 bankruptcy) may cause an ownership change with respect to Dex Media on the effective date of the merger. As a result, Section 382 of the Code may apply to limit Dex Media’s use of any remaining net operating losses and other pre-change tax attributes after the effective date of the merger. In the event Dex Media experiences an ownership change as a result of the SuperMedia merger, although there can be no assurance in this regard, we expect that the resulting limitation on Dex Media’s ability to utilize its net operating losses and other pre-change tax attributes should be significantly increased as a result of its NUBIG, permitting Dex Media to use more of its net operating losses than it would otherwise. Dex Media’s net operating losses and other pre-change tax attributes

 

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after the effective date of the merger may be adversely affected if an ownership change within the meaning of Section 382 of the Code were to occur after the effective date of the SuperMedia merger. In order to prevent an ownership change after the effective date of the SuperMedia merger, Dex Media’s common stock will generally be subject to transfer restrictions. No such transfer restrictions currently exist with respect to the Dex One’s common stock. However, there can be no assurances that these restrictions will prevent an ownership change from occurring in the future.

Amendments to Dex One’s or SuperMedia’s credit facilities may increase the tax liability or reduce the tax assets of the combined company.

Completion of the transaction is contingent upon, among other things, amendments to certain of Dex One’s and SuperMedia’s outstanding credit facilities. See “Description of Certain Indebtedness” for more information. To the extent that loans issued under such a credit facility trade at a discount at the time of such an amendment, Dex One, SuperMedia, or Dex Media, as the case may be, may realize cancellation of debt income (“CODI”) for U.S. federal income tax purposes without a corresponding receipt of cash. If such amendment occurs outside of court, some or all of such CODI may be included in taxable income. If such amendment occurs as part of a Chapter 11 bankruptcy process, no such CODI will be included in taxable income. In either event, tax attributes that might otherwise be available to offset income or tax of Dex One, SuperMedia, or Dex Media, as the case may be, would be reduced to the extent of any CODI that is not included in taxable income. However, we expect that the amount of CODI realized will result in a corresponding amount of original issue discount that will be deductible for U.S. federal income tax purposes by Dex One, SuperMedia, or Dex Media, as the case may be, over the term of the applicable amended credit facilities.

The continuing declining use of print yellow pages directories will adversely affect Dex Media’s business.

Overall references to print yellow pages directories in the United States have declined from 14.5 billion in 2005 to 7.5 billion in 2011 according to a Local Search Association (formerly known as the Yellow Pages Association) Industry Usage Study. This decline is primarily attributable to increased use of internet search providers, as well as the proliferation of very large retail stores for which consumers and businesses may not reference the yellow pages. The decline will negatively affect the advertising sales associated with traditional print business. Use of Dex Media’s print directories may continue to decline. A significant decline in usage of Dex Media’s print directories could impair its ability to maintain or increase advertising prices and cause businesses to reduce or discontinue purchasing advertising in its yellow pages directories. Either or both of these factors would adversely affect Dex Media’s revenue and have a material adverse effect on Dex Media’s business, prospects, financial condition, results of operations and cash flow.

Risks Related to the Prepackaged Plans and Other Bankruptcy Law Considerations

The prepackaged plans may have a material adverse effect on Dex One’s and SuperMedia’s operations.

The solicitation of acceptances of the prepackaged plans and any subsequent commencement of Chapter 11 cases could adversely affect the relationships between Dex One and SuperMedia and their respective customers, employees, partners and others. There is a risk, due to uncertainty about Dex One’s and SuperMedia’s future, that, among other things:

 

   

Dex One’s and SuperMedia’s customers’ confidence in the abilities of Dex One and SuperMedia, respectively, to produce and deliver their products and services could erode, resulting in a significant decline in Dex One’s and SuperMedia’s revenues, profitability and cash flow;

 

   

it may become more difficult to retain, attract or replace key employees;

 

   

employees could be distracted from performance of their duties or more easily attracted to other career opportunities; and

 

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Dex One’s and SuperMedia’s suppliers, vendors, and service providers could terminate their relationships with Dex One or SuperMedia, respectively, or require financial assurances or enhanced performance, subject to Dex One’s and SuperMedia’s assertions in the Bankruptcy Court of certain protections under the Bankruptcy Code.

Even if Dex One and SuperMedia receive all necessary acceptances and meet all other conditions precedent for the prepackaged plans to become effective, either of the board of directors may not approve the commencement of the applicable Chapter 11 case and the transaction may not be completed.

At this time, neither Dex One nor SuperMedia has taken any action approving a bankruptcy filing. Although the parties may file the Chapter 11 cases to complete the transaction through the prepackaged plans in the event the necessary approvals for an out of court consummation are not met, neither Dex One nor SuperMedia has any obligation to commence its respective Chapter 11 case in any such event. The approval of the respective board of directors for each of Dex One and SuperMedia is required before a Chapter 11 case for such party can be commenced. Even if Dex One and SuperMedia receive all necessary acceptances and meet all other conditions precedent for the prepackaged plans to become effective, either party’s board of directors may not approve the commencement of the applicable Chapter 11 case and the transaction may not be completed.

The Bankruptcy Court may not confirm the prepackaged plans or may require Dex One and SuperMedia to re-solicit votes with respect to the prepackaged plans.

Neither Dex One nor SuperMedia can assure you that the prepackaged plans, if filed, will be confirmed by the Bankruptcy Court. Section 1129 of the Bankruptcy Code, which sets forth the requirements for confirmation of a plan of reorganization, requires, among other things, a finding by the Bankruptcy Court that the plan of reorganization is “feasible,” that all claims and interests have been classified in compliance with the provisions of Section 1122 of the Bankruptcy Code, and that, under the plan of reorganization, each holder of a claim or interest within each impaired class either accepts the plan of reorganization or receives or retains cash or property of a value, as of the date the plan of reorganization becomes effective, that is not less than the value such holder would receive or retain if the debtor were liquidated under Chapter 7 of the Bankruptcy Code. See “The Prepackaged Plans—The Dex One Prepackaged Plan—Confirmation of the Dex One Prepackaged Plan” and “The Prepackaged Plans—The SuperMedia Prepackaged Plan—Confirmation of the SuperMedia Prepackaged Plan.” There can be no assurance that the Bankruptcy Court will conclude that the feasibility test and other requirements of Section 1129 of the Bankruptcy Code have been met with respect to the prepackaged plans.

If the prepackaged plans are filed, there can be no assurance that modifications to such plan would not be required for confirmation, or that such modifications would not require a re-solicitation of votes on the prepackaged plans.

Moreover, the Bankruptcy Court could fail to approve this document or the disclosure statement sent to Dex One’s and SuperMedia’s senior secured lenders and determine that the votes in favor of the prepackaged plans should be disregarded. Dex One and SuperMedia then would be required to recommence the solicitation process, which would include re-filing plans of reorganization and disclosure statements. Typically, this process involves a 60- to 90-day period and includes a court hearing for the required approval of a disclosure statement, followed (after bankruptcy court approval) by another solicitation of claim and interest holder votes for the plan of reorganization, followed by a confirmation hearing which the Bankruptcy Court will determine whether the requirements for confirmation have been satisfied, including the requisite claim and interest holder acceptances.

If the prepackaged plans are not confirmed, Dex One’s and SuperMedia’s reorganization cases may be converted into a case under Chapter 7 of the Bankruptcy Code, pursuant to which a trustee would be appointed or elected to liquidate either Dex One’s or SuperMedia’s assets, as applicable, for distribution in accordance with the priorities established by the Bankruptcy Code. A discussion of the effects that a Chapter 7 liquidation would have on the recoveries of holders of claims and interests and the Dex One’s and SuperMedia’s liquidation

 

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analyses are set forth under “Unaudited Liquidation Analysis of Dex One Corporation” and “Unaudited Liquidation Analysis of SuperMedia Inc.” contained in this document as Appendices H and I, respectively. Dex One and SuperMedia believe that liquidation under Chapter 7 of the Bankruptcy Code would result in, among other things:

 

   

smaller distributions being made to creditors than those provided for in the prepackaged plans because of:

 

   

the likelihood that Dex One’s and SuperMedia’s assets would need to be sold or otherwise disposed of in a less orderly fashion over a short period of time;

 

   

additional administrative expenses involved in the appointment of a trustee; and

 

   

additional expenses and claims, some of which would be entitled to priority, which would be generated during the liquidation and from the rejection of leases and other executory contracts in connection with a cessation of Dex One’s and SuperMedia’s operations.

The Bankruptcy Court may find the solicitation of acceptances inadequate.

Usually, votes to accept or reject a plan of reorganization are solicited after the filing of a petition commencing a Chapter 11 case. Nevertheless, a debtor may solicit votes prior to the commencement of a Chapter 11 case in accordance with Sections 1125(g) and 1126(b) of the Bankruptcy Code and Bankruptcy Rule 3018(b). The Federal Rules of Bankruptcy Procedure are referred to as the “Bankruptcy Rules.” Sections 1125(g) and 1126(b) of the Bankruptcy Code and Bankruptcy Rule 3018(b) require that:

 

   

solicitation comply with applicable nonbankruptcy law;

 

   

the plan of reorganization be transmitted to substantially all creditors and other interest holders entitled to vote; and

 

   

the time prescribed for voting is not unreasonably short.

With regard to solicitation of votes prior to the commencement of a bankruptcy case, if the Bankruptcy Court concludes that the requirements of Bankruptcy Rule 3018(b) have not been met, then the Bankruptcy Court could deem such votes invalid, whereupon the prepackaged plans could not be confirmed without a resolicitation of votes to accept or reject the prepackaged plans. While Dex One and SuperMedia believe that the requirements of Sections 1125(g) and 1126(b) of the Bankruptcy Code and Bankruptcy Rule 3018(b) will be met, there can be no assurance that the Bankruptcy Court will reach the same conclusion.

Dex One and SuperMedia may not be able to satisfy the voting requirements for confirmation of the prepackaged plans.

If votes are received in number and amount sufficient to enable the Bankruptcy Court to confirm the prepackaged plans, Dex One and Super Media may seek, as promptly as practicable thereafter, confirmation. If the prepackaged plans do not receive the required support from voting creditors and stockholders, each of Dex One and SuperMedia may elect to amend the prepackaged plans, seek confirmation regardless of the rejection, seek to sell their assets pursuant to Section 363 of the Bankruptcy Code, or proceed with liquidation.

The prepackaged plans may be confirmed over the objection of the stockholders.

Under the “cram down” provisions of the Bankruptcy Code, the Dex One prepackaged plan and the SuperMedia prepackaged plan, as applicable, may be confirmed even if the stockholders of Dex One or SuperMedia, respectively, do not vote to accept the applicable plan if the Bankruptcy Court finds that such plan does not discriminate unfairly, and is fair and equitable, regarding each class of claims or interests that is impaired under, and has not accepted, the plan. If the requisite votes of the senior secured lenders of Dex One or SuperMedia to accept the Dex One or SuperMedia prepackaged plan, as applicable, are obtained but the requisite

 

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votes of the stockholders of Dex One or SuperMedia to accept the applicable plan are not, Dex One or SuperMedia, as the case may be, may seek to have the applicable plan confirmed under the “cram down” provisions of the Bankruptcy Code.

Even if Dex One and SuperMedia receive all necessary acceptances necessary for the prepackaged plans to become effective, either Dex One or SuperMedia may fail to meet all conditions precedent to effectiveness of the Dex One prepackaged plan or the SuperMedia prepackaged plan, as applicable.

Although Dex One and SuperMedia believe that the effective date would occur very shortly after confirmation of the prepackaged plans, there can be no assurance as to such timing.

The confirmation and effectiveness of the prepackaged plans are subject to certain conditions that may or may not be satisfied. Neither Dex One nor SuperMedia can assure you that all requirements for confirmation and effectiveness required under the prepackaged plans will be satisfied. See “The Prepackaged Plans—The Dex One Prepackaged Plan—Confirmation of the Dex One Prepackaged Plan” and “The Prepackaged Plans—The SuperMedia Prepackaged Plan—Confirmation of the SuperMedia Prepackaged Plan.”

A claim or interest holder may object to, and the Bankruptcy Court may disagree with, either Dex One’s or SuperMedia’s classifications of Claims and Interests.

Section 1122 of the Bankruptcy Code provides that a plan may place a claim or an interest in a particular class only if such claim is substantially similar to the other claims or interests of such class. Although Dex One and SuperMedia believe that the classifications of Claims and Interests under the prepackaged plans complies with the requirements set forth in the Bankruptcy Code, once any Chapter 11 cases have been commenced, a Claim or Interest holder could challenge the classification. In such event, the cost of the prepackaged plans and the time needed to confirm the prepackaged plans may increase, and neither Dex One nor SuperMedia can assure you that the Bankruptcy Court will agree with its classification of Claims and Interests. If the Bankruptcy Court concludes that either or both of the classifications of Claims and Interests under the prepackaged plans do not comply with the requirements of the Bankruptcy Code, Dex One or SuperMedia may need to modify the Dex One prepackaged plan or the SuperMedia prepackaged plan, respectively. Such modification could require a re-solicitation of votes on either or both of the prepackaged plans. The prepackaged plans may not be confirmed if the Bankruptcy Court determines that either or both of Dex One’s or SuperMedia’s classifications of Claims and Interests is not appropriate.

The SEC, the United States Trustee, or other parties may object to the prepackaged plans on account of the third-party release provisions

If Dex One and SuperMedia commence Chapter 11 cases to confirm the prepackaged plans, any party in interest, including the SEC and the United States Trustee, could object to either or both of the prepackaged plans on the grounds that the third-party releases are not given consensually or in a permissible non-consensual manner. In response to such an objection, the Bankruptcy Court could determine that the third-party releases are not valid under the Bankruptcy Code. If the Bankruptcy Court made such a determination, neither the Dex One prepackaged plan nor SuperMedia prepackaged plan, as applicable, could be confirmed without being modified to remove the third party release provisions. This could result in substantial delay in confirmation of either or both of the prepackaged plans or either or both of the prepackaged plans not being confirmed.

If Dex One and SuperMedia commence Chapter 11 cases, contingencies may affect distributions to holders of allowed Claims and Interests

The distributions available to holders of allowed Claims and Interests under the prepackaged plans can be affected by a variety of contingencies, including whether the Bankruptcy Court orders certain allowed claims to be subordinated to other allowed claims. The occurrence of any and all such contingencies could affect distributions under the prepackaged plans.

 

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Other parties in interest might be permitted to propose alternative plans of reorganization that may be less favorable to certain of Dex One’s and SuperMedia’s constituencies than the prepackaged plans.

If Dex One and SuperMedia commence Chapter 11 cases to confirm the prepackaged plans or any other Chapter 11 cases, other parties in interest could seek authority from the Bankruptcy Court to propose an alternative plan of reorganization. Under the Bankruptcy Code, a debtor-in-possession initially has the exclusive right to propose and solicit acceptances of a plan of reorganization for a period of 120 days from the filing. However, such exclusivity period can be reduced or terminated upon order of the Bankruptcy Court. If such an order were to be entered, other parties in interest would then have the opportunity to propose alternative plans of reorganization.

If other parties in interest were to propose an alternative plan of reorganization following expiration or termination of Dex One’s and SuperMedia’s exclusivity periods, such a plan may be less favorable to existing equity interest holders and may seek to exclude these holders from retaining any equity under their plan. Alternative plans of reorganization also may treat less favorably the claims of a number of other constituencies, including the senior secured creditors, Dex One’s and SuperMedia’s employees and Dex One’s and SuperMedia’s trading partners and customers. Dex One and SuperMedia consider maintaining relationships with their senior secured creditors, common stockholders, employees and trading partners and customers as critical to maintaining the value of Dex Media following consummation of the transaction, and have sought to treat those constituencies accordingly. However, proponents of alternative plans of reorganization may not share Dex One’s and SuperMedia’s assessments and may seek to impair the claims of such constituencies to a greater degree. If there were competing plans of reorganization, Dex One’s and SuperMedia’s reorganization cases likely would become longer, more complicated and much more expensive. If this were to occur, or if Dex One’s or SuperMedia’s employees or other constituencies important to Dex One’s or SuperMedia’s business reacted adversely to an alternative plan of reorganization, the adverse consequences discussed in the first risk factor in this section discussing risks related to the prepackaged plans also could occur.

Dex One’s or SuperMedia’s business may be negatively affected if Dex One or SuperMedia is unable to assume its executory contracts.

An executory contract is a contract on which performance remains due to some extent by both parties to the contract. The prepackaged plans provide for the assumption of all executory contracts and unexpired leases, unless designated on a Schedule of Rejected Contracts. Dex One and SuperMedia intend to preserve as much of the benefit of their existing contracts and leases as possible. However, with respect to some limited classes of executory contracts, including licenses with respect to patents or trademarks, either Dex One or SuperMedia may need to obtain the consent of the counterparty to maintain the benefit of the contract. There is no guarantee that such consent either would be forthcoming or that conditions would not be attached to any such consent that makes assuming the contracts unattractive. Either Dex One or SuperMedia, as applicable, then would be required to either forego the benefits offered by such contracts or to find alternative arrangements to replace them.

Material transactions could be set aside as fraudulent conveyances or preferential transfers.

Certain payments received by stakeholders prior to the bankruptcy filing could be challenged under applicable debtor/creditor or bankruptcy laws as either a “fraudulent conveyance” or a “preferential transfer.” A fraudulent conveyance occurs when a transfer of a debtor’s assets is made with the intent to defraud creditors or in exchange for consideration that does not represent reasonably equivalent value to the property transferred. A preferential transfer occurs upon a transfer of property of the debtor while the debtor is insolvent for the benefit of a creditor on account of an antecedent debt owed by the debtor that was made on or within 90 days before the date of filing of the bankruptcy petition or one year before the date of filing of the petition, if the creditor, at the time of such transfer was an insider. If any transfer was challenged in the Bankruptcy Court and found to have occurred with regard to any of Dex One’s or SuperMedia’s material transactions, a bankruptcy court could order the recovery of all amounts received by the recipient of the transfer.

 

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Either Dex One or SuperMedia may be unsuccessful in obtaining first day orders to permit it to pay its key suppliers and its employees, or to continue to perform customer programs, in the ordinary course of business.

Dex One and SuperMedia have tried to address potential concerns of their key customers, vendors, employees and other parties in interest that might arise from the filing of the prepackaged plans through a variety of provisions incorporated into or contemplated by the prepackaged plans, including Dex One’s and SuperMedia’s intentions to seek appropriate court orders to permit Dex One and SuperMedia to pay their prepetition and post petition accounts payable to parties in interest in the ordinary course. However, there can be no guarantee that either Dex One or SuperMedia will be successful in obtaining the necessary approvals of the Bankruptcy Court for such arrangements or for every party in interest Dex One or SuperMedia may seek to treat in this manner, and, as a result, Dex One’s and SuperMedia’s businesses might suffer.

Neither Dex One nor SuperMedia can predict the amount of time that it would spend in bankruptcy for the purpose of implementing the Dex One prepackaged plan or the SuperMedia prepackaged plan, respectively, and a lengthy bankruptcy proceeding could disrupt Dex One’s or SuperMedia’s business, as well as impair the prospect for reorganization on the terms contained in the prepackaged plans.

While both Dex One and SuperMedia expect that Chapter 11 cases filed solely for the purpose of implementing the prepackaged plans would be of short duration and would not be unduly disruptive to the either Dex One’s or SuperMedia’s business, neither Dex One nor SuperMedia can be certain that this necessarily would be the case. Although the prepackaged plans are designed to minimize the length of the bankruptcy proceedings, it is impossible to predict with certainty the amount of time that either Dex One or SuperMedia may spend in bankruptcy, and neither Dex One nor SuperMedia can be certain that either the Dex One prepackaged plan or the SuperMedia prepackaged plan would be confirmed. Even if confirmed on a timely basis, a bankruptcy proceeding to confirm the prepackaged plans could itself have an adverse effect on either Dex One’s or SuperMedia’s business. There is a risk, due to uncertainty about Dex One’s and SuperMedia’s futures, that, among other things:

 

   

customers could move to Dex One’s and SuperMedia’s competitors, including competitors that have comparatively greater financial resources and that are in comparatively less financial distress;

 

   

employees could be distracted from performance of their duties or more easily attracted to other career opportunities; and

 

   

business partners could terminate their relationship with either Dex One or SuperMedia or demand financial assurances or enhanced performance, any of which could impair either Dex One’s or SuperMedia’s prospects.

A lengthy bankruptcy proceeding also would involve additional expenses and divert the attention of management from the operation of Dex One’s and SuperMedia’s businesses, as well as create concerns for employees, suppliers and customers.

The disruption that bankruptcy proceedings would have upon Dex One’s and SuperMedia’s businesses could increase with the length of time it takes to complete the proceeding. If either Dex One or SuperMedia is unable to obtain confirmation of either the Dex One prepackaged plan or the SuperMedia prepackaged plan on a timely basis, because of a challenge to either the Dex One prepackaged plan or the SuperMedia prepackaged plan or otherwise, either Dex One or SuperMedia may be forced to operate in bankruptcy for an extended period of time while it tries to develop a different reorganization plan that can be confirmed. A protracted bankruptcy case could increase both the probability and the magnitude of the adverse effects described above.

 

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Either Dex One or SuperMedia may seek to amend, waive, modify or withdraw either the Dex One prepackaged plan or the SuperMedia prepackaged plan, respectively, at any time prior to the confirmation of the prepackaged plans.

Dex One and SuperMedia reserve the right, prior to the confirmation or substantial consummation thereof, subject to the provisions of Section 1127 of the Bankruptcy Code and applicable law and the Dex One support agreement and the SuperMedia support agreement, respectively, to amend the terms of the Dex One prepackaged plan or the SuperMedia prepackaged plan, respectively, or waive any conditions thereto if and to the extent such amendments or waivers are necessary or desirable to consummate the prepackaged plans. The potential impact of any such amendment or waiver on the holders of Claims and Interests cannot presently be foreseen but may include a change in the economic impact of the prepackaged plans on some or all of the proposed classes or a change in the relative rights of such classes. All holders of Claims and Interests will receive notice of such amendments or waivers required by applicable law and the Bankruptcy Court. If, after receiving sufficient acceptances, but prior to confirmation of the prepackaged plans, either Dex One or SuperMedia seeks to modify the Dex One prepackaged plan or the SuperMedia prepackaged plan, as applicable, the previously solicited acceptances will be valid only if (1) all classes of adversely affected creditors and interest holders accept the modification in writing or (2) the Bankruptcy Court determines, after notice to designated parties, that such modification was de minimis or purely technical or otherwise did not adversely change the treatment of holders accepting Claims and Interests or is otherwise permitted by the Bankruptcy Code.

Dex One or SuperMedia may object to the amount or classification of a claim or interest.

Except as otherwise provided in the prepackaged plans, Dex One and SuperMedia reserve the right to object to the amount or classification of any claim or interest under either the Dex One prepackaged plan or SuperMedia prepackaged plan, respectively. The estimates set forth in this document cannot be relied on by any holder of a claim or interest where such claim or interest is subject to an objection. Any holder of a claim or interest that is subject to an objection thus may not receive its expected share of the estimated distributions described in this document.

The Bankruptcy Court may not approve Dex One’s or SuperMedia’s use of cash collateral.

If the Chapter 11 cases are filed, Dex One and SuperMedia will ask the Bankruptcy Court to authorize Dex One and SuperMedia, respectively, to use cash collateral to fund the Chapter 11 cases. Such access to cash collateral will provide liquidity during the pendency of the Chapter 11 cases. There can be no assurance that the Bankruptcy Court will approve such use of cash collateral on the terms requested. Moreover, if the Chapter 11 cases take longer than expected to conclude, either Dex One or SuperMedia may exhaust their available cash collateral. There can be no assurance that either Dex One or SuperMedia will be able to obtain an extension of the right to use cash collateral, in which case, the liquidity necessary for the orderly functioning of either Dex One’s and SuperMedia’s businesses may be impaired materially.

The confirmation and consummation of the prepackaged plans could be delayed.

Dex One and SuperMedia estimate that the process of obtaining confirmation of the prepackaged plans by the Bankruptcy Court will last approximately 30 to 60 days from the date of the commencement of the Chapter 11 cases, but it could last considerably longer if, for example, confirmation is contested or the conditions to confirmation or consummation are not satisfied or waived.

Other Risk Factors Relating to Dex One and SuperMedia

Dex One’s and SuperMedia’s businesses are and will be subject to the risks described above. In addition, Dex One and SuperMedia are, and will continue to be, subject to the risks described in Dex One’s and SuperMedia’s Annual Reports on Form 10-K for the fiscal year ended December 31, 2011, as such may be updated or supplemented in each company’s subsequently filed Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, to the extent incorporated by reference into this document. See “Where You Can Find More Information.”

 

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THE DEX ONE SPECIAL MEETING AND VOTING INSTRUCTIONS

This section contains information from Dex One for Dex One stockholders about the special meeting of Dex One stockholders that has been called to consider and vote upon the proposal to approve and adopt the merger agreement and the transactions it contemplates.

Together with this document, we are also sending you a notice of the Dex One special meeting and a form of proxy that is solicited by the Dex One board of directors. The Dex One special meeting will be held at Dex One’s corporate headquarters, 1001 Winstead Drive, Cary, North Carolina 27513, on March 13, 2013 at 1:00 p.m., local time.

Matters to Be Considered

The purpose of the Dex One special meeting is to consider and vote on:

 

   

a proposal to approve and adopt the merger agreement and the transactions it contemplates;

 

   

a proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to Dex One’s named executive officers that is based on or otherwise relates to the transaction; and

 

   

a proposal to approve the adjournment of the special meeting, including, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve either of the foregoing proposals.

In addition, Dex One stockholders are being asked to vote to accept the Dex One prepackaged plan.

Proxies and Ballots

Each copy of this document mailed to holders of Dex One common stock is accompanied by a form of proxy and ballot, with instructions for voting by mail. If you hold stock in your name as a stockholder of record, you should complete and return the proxy and ballot accompanying this document to ensure that your vote is counted at the special meeting, or at any adjournment or postponement of the special meeting, regardless of whether you plan to attend the special meeting. If you hold your stock in “street name” through a bank, broker or other nominee you must either (1) if you received a proxy and ballot and return envelope addressed to your nominee, provide the nominee with instructions on how to vote your shares, or (2) if you received a pre-validated proxy and ballot (executed by your nominee) and a return envelope addressed to Epiq (the voting agent), provide your proxy and ballot directly to the voting agent.

For the proposals to consummate the transaction out of court, if you hold stock in your name as a stockholder of record, you may revoke any proxy at any time before it is voted by signing and returning a proxy and ballot with a later date, delivering a written revocation letter to Dex One’s Corporate Secretary, or by attending the special meeting in person, notifying the Corporate Secretary that you are revoking your proxy and ballot at the special meeting.

If you submit your proxy and ballot by mail, you may, prior to the voting deadline, revoke or change a vote contained within your ballot to accept or reject the Dex One prepackaged plan. If you want to withdraw your vote on the Dex One prepackaged plan and you do not want to submit another vote in its place, you must deliver a written notice of revocation or withdrawal to Epiq prior to the voting deadline. To change your vote, you may submit a new proxy and ballot and your prior proxy and ballot will be revoked and superseded.

Any stockholder entitled to vote in person at the special meeting may vote regardless of whether a proxy and ballot has been previously submitted by submitting a proxy and ballot at the special meeting, but the mere

 

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presence (without notifying the Corporate Secretary) of a stockholder at the special meeting will not constitute revocation of a previously given proxy and ballot. Written notices of revocation and other communications about revoking your proxy and ballot should be addressed to:

Dex One Corporation Ballot Processing Center

c/o Epiq Systems

FDR Station, P.O. Box 5014

New York, New York 10150-5014

If your shares are held in “street name” by a bank or broker, you should follow the instructions of your bank or broker regarding the revocation of proxies and ballots.

All shares represented by a valid proxy and ballot, and that are not revoked, will be voted in accordance with the instructions you provide on the proxy and ballot. If you make no specification on your proxy and ballot as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” approval and adoption of the merger agreement and the transactions it contemplates, “FOR” approval, on a non-binding, advisory basis, of the compensation that may be paid or become payable to Dex One’s named executive officers that is based on or otherwise relates to the transaction and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies. If you make no specification on your ballot as to how you want your shares voted before signing and returning it, your ballot will not be voted either to accept or reject the Dex One prepackaged plan. According to Dex One’s amended and restated bylaws, only business within the purpose or purposes described in the notice of special meeting may be conducted at the meeting.

Solicitation of Proxy and Ballots

In accordance with the merger agreement, the cost of proxy and ballot solicitation for the transaction will be borne by Dex One, except that Dex One and SuperMedia will share equally all expenses incurred in connection with the filing with the SEC of the registration statement of which this document forms a part and the printing and mailing of this document. Dex One and SuperMedia have also made arrangements with Epiq to assist them in soliciting proxy and ballots and have agreed to pay it $25,000 and $35,000, respectively, plus reasonable expenses for these services. If necessary, Dex One may use several of its regular employees, who will not be specially compensated, to solicit proxy and ballots from Dex One stockholders, either personally or by telephone, facsimile, letter or other electronic means. Dex One will also request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of shares held of record on January 25, 2013 and will provide customary reimbursement to such firms for the cost of forwarding these materials.

Record Date

The record date for the Dex One special meeting is January 25, 2013. Only record holders of shares of Dex One common stock at the close of business on such date are entitled to notice of the Dex One special meeting or any adjournment or postponement of the Dex One special meeting and to vote for or against the Dex One out of court proposal and the Dex One bankruptcy proposal. At that time, 51,309,809 shares of Dex One common stock were outstanding, held by approximately four holders of record.

Quorum

A majority of the votes entitled to be cast by the shares entitled to vote must be present or represented by proxy to constitute a quorum for action on the matters to be voted upon at the special meeting other than the proposal to approve the Dex One prepackaged plan. All shares of Dex One common stock represented at the Dex One special meeting, including abstentions and broker non-votes, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the Dex One special meeting.

 

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Vote Required

Each share of Dex One common stock outstanding on the record date entitles the holder to one vote on each matter to be voted upon by stockholders at the special meeting and one vote to either “accept” or “reject” the Dex One prepackaged plan.

Proposals to Approve and Adopt the Merger Agreement; Approve, on a Non-binding Advisory Basis, Specified Compensatory Arrangements Between Dex One and its Named Executive Officers Relating to the Transaction; and Adjourn the Special Meeting

The votes required, as well as the effects of abstentions/shares present but not voted and broker non-votes for each of the proposals, at the special meeting of Dex One stockholders are detailed in the following chart:

 

Proposal

 

Required Stockholder Vote

 

Effect of Abstentions/

Shares Present but not Voted

 

Effect of Broker Non-Votes

Merger Agreement Proposal (No. 1)   Majority of outstanding shares of common stock eligible to vote   Same effect as a vote
against the proposal
  Same effect as a vote
against the proposal
Golden Parachute Proposal (No. 2)   Majority of shares of common stock represented at the special meeting and entitled to vote   Same effect as a vote
against the proposal
  No effect
Adjournment Proposal (No. 3)   Majority of shares of common stock represented at the special meeting and entitled to vote   Same effect as a vote
against the proposal
  No effect

Proposal to Accept the Dex One Prepackaged Plan

The votes required, as well as the effects of abstentions/failures to vote and broker non-votes, for stockholders to accept the Dex One prepackaged plan are detailed in the following chart:

 

Required Stockholder Vote

  

Effect of Abstentions/

Failures to Vote

  

Effect of Broker Non-Votes

At least 2/3 in amount of common stock that vote to either “accept” or “reject” the Dex One prepackaged plan    No effect    No effect

The Dex One board of directors urges Dex One stockholders to promptly vote by completing, dating and signing the accompanying proxy and ballot and returning it promptly in the enclosed postage-paid envelope. If you hold your stock in “street name” through a bank or broker, please vote by following the voting instructions of your bank or broker.

Stockholders will vote at the meeting by ballot. Votes cast at the meeting, in person or by proxy, will be tallied by Dex One’s inspector of election.

As of the record date, directors and executive officers of Dex One had the right to vote approximately 1,277,449 shares of Dex One common stock, or approximately 2.5% of the outstanding Dex One shares entitled to vote at the special meeting. Dex One currently expects that these individuals will vote their shares of Dex One common stock in favor of the proposals to be presented at the special meeting.

 

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Recommendation of the Dex One Board of Directors

The Dex One board of directors has approved and adopted the merger agreement and the transactions it contemplates. The Dex One board of directors has determined that the merger agreement and the transactions it contemplates are advisable and in the best interests of Dex One and its stockholders, whether consummated out of court or in Chapter 11 cases. The Dex One board of directors unanimously recommends that the Dex One stockholders vote “FOR” the proposal to approve and adopt the merger agreement and the transactions it contemplates, vote “FOR” approval, on a non-binding, advisory basis, of the compensation that may be paid or become payable to Dex One’s named executive officers that is based on or otherwise relates to the transaction, vote “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies and vote to “ACCEPT” the Dex One prepackaged plan. See “Proposal 1 — Dex One’s Reasons for the Transaction; Recommendation of the Dex One Board of Directors” for a more detailed discussion of the Dex One board of directors’ recommendation.

Attending the Meeting

All holders of Dex One common stock, including stockholders of record and stockholders who hold their shares through banks, brokers, nominees or any other stockholder of record, are invited to attend the special meeting. If you are not a stockholder of record, you must obtain a proxy executed in your favor from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the special meeting. If you plan to attend the special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership and you must bring a form of personal photo identification with you in order to be admitted. Dex One reserves the right to refuse admittance to anyone without proper proof of share ownership and without proper photo identification.

 

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THE SUPERMEDIA SPECIAL MEETING AND VOTING INSTRUCTIONS

This section contains information from SuperMedia for SuperMedia stockholders about the special meeting of SuperMedia stockholders that has been called to consider a proposal to approve and adopt the merger agreement and the transactions it contemplates.

Together with this document, we are also sending you a notice of the SuperMedia special meeting and a form of proxy that is solicited by the SuperMedia board of directors. The SuperMedia special meeting will be held at SuperMedia’s corporate headquarters, 2200 West Airfield Drive, D/FW Airport, Texas 75261, on March 13, 2013 at 12:00 p.m., local time.

Matters to Be Considered

The purpose of the SuperMedia special meeting is to consider and vote on:

 

   

a proposal to approve and adopt the merger agreement and the transactions it contemplates;

 

   

a proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to SuperMedia’s named executive officers that is based on or otherwise relates to the transaction; and

 

   

a proposal to approve the adjournment of the special meeting, including, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve either of the foregoing proposals.

In addition, SuperMedia stockholders are being asked to vote to accept the SuperMedia prepackaged plan.

Proxies and Ballots

Each copy of this document mailed to holders of SuperMedia common stock is accompanied by a form of proxy and ballot, with instructions for voting by mail. If you hold stock in your name as a stockholder of record, you should complete and return the proxy and ballot accompanying this document to ensure that your vote is counted at the special meeting, or at any adjournment or postponement of the special meeting, regardless of whether you plan to attend the special meeting. If you hold your stock in “street name” through a bank, broker or other nominee you must either (1) if you received a proxy and ballot and return envelope addressed to your nominee, provide the nominee with instructions on how to vote your shares, or (2) if you received a pre-validated proxy and ballot (executed by your nominee) and a return envelope addressed to Epiq (the voting agent), provide your proxy and ballot directly to the voting agent.

For the proposals to consummate the transaction out of court, if you hold stock in your name as a stockholder of record, you may revoke any proxy at any time before it is voted by signing and returning a proxy and ballot with a later date, delivering a written revocation letter to SuperMedia’s Corporate Secretary, or by attending the special meeting in person, notifying the Corporate Secretary that you are revoking your proxy and voting by ballot at the special meeting.

If you submit your proxy and ballot to accept or reject the SuperMedia prepackaged plan by mail, you may, prior to the voting deadline, revoke or change a vote contained within your ballot. If you want to withdraw your vote on the SuperMedia prepackaged plan and you do not want to submit another vote in its place, you must deliver a written notice of revocation or withdrawal to Epiq prior to the voting deadline. To change your vote, you may submit a new proxy and ballot and your prior proxy and ballot will be revoked and superseded.

 

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Any stockholder entitled to vote in person at the special meeting may vote regardless of whether a proxy and ballot has been previously submitted by submitting a proxy and ballot at the special meeting, but the mere presence (without notifying the Corporate Secretary) of a stockholder at the special meeting will not constitute revocation of a previously given proxy and ballot. Written notices of revocation and other communications about revoking your proxy and ballot should be addressed to:

SuperMedia Inc. Ballot Processing Center

c/o Epiq Systems

FDR Station, P.O. Box 5014

New York, New York 10150-5014

If your shares are held in “street name” by a bank or broker, you should follow the instructions of your bank or broker regarding the revocation of proxies and ballots.

All shares represented by a valid proxy and ballot, and that are not revoked, will be voted in accordance with the instructions you provide on the proxy and ballot. If you make no specification on your proxy and ballot as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” approval and adoption of the merger agreement and the transactions it contemplates, “FOR” approval, on a non-binding, advisory basis, of the compensation that may be paid or become payable to SuperMedia’s named executive officers that is based on or otherwise relates to the transaction and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies. If you make no specification on your ballot as to how you want your shares voted before signing and returning it, your ballot will not be voted either to accept or reject the SuperMedia prepackaged plan.

Solicitation of Proxy and Ballots

In accordance with the merger agreement, the cost of proxy and ballot solicitation for the SuperMedia special meeting will be borne by SuperMedia, except that Dex One and SuperMedia will share equally all expenses incurred in connection with the filing with the SEC of the registration statement of which this document forms a part and the printing and mailing of this document. Dex One and SuperMedia have also made arrangements with Epiq to assist them in soliciting proxy and ballots and have agreed to pay it $25,000 and $35,000, respectively, plus reasonable expenses for these services. If necessary, SuperMedia may use several of its regular employees, who will not be specially compensated, to solicit proxy and ballots from SuperMedia stockholders, either personally or by telephone, facsimile, letter or other electronic means. SuperMedia will also request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of shares held of record on January 25, 2013 and will provide customary reimbursement to such firms for the cost of forwarding these materials.

Record Date

The record date for the SuperMedia special meeting is January 25, 2013. Only record holders of shares of SuperMedia common stock at the close of business on such date are entitled to notice of the SuperMedia special meeting or any adjournment or postponement of the SuperMedia special meeting and to vote for or against the SuperMedia out of court proposal and the SuperMedia bankruptcy proposal. At that time, 15,664,432 shares of SuperMedia common stock were outstanding, held by approximately 174 holders of record.

Quorum

A majority of the votes entitled to be cast by the shares entitled to vote must be present or represented by proxy to constitute a quorum for action on the matters to be voted upon at the special meeting other than the proposal to approve the SuperMedia prepackaged plan. All shares of SuperMedia common stock represented at the SuperMedia special meeting, including abstentions and broker non-votes, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the SuperMedia special meeting.

 

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Vote Required

Each share of SuperMedia common stock outstanding on the record date entitles the holder to one vote on each matter to be voted upon by stockholders at the special meeting and one vote to either “accept” or “reject” the SuperMedia prepackaged plan.

Proposals to Adopt the Merger Agreement; Approve, on a Non-binding Advisory Basis, Specified Compensatory Arrangements Between SuperMedia and its Named Executive Officers Relating to the Transaction; and Adjourn the Special Meeting

The votes required, as well as the effects of abstentions/shares present but not voted and broker non-votes for each of the proposals, at the special meeting of SuperMedia stockholders are detailed in the following chart:

 

Proposal

 

Required Stockholder Vote

 

Effect of Abstentions/ Shares
Present but not Voted

 

Effect of Broker Non-Votes

Merger Agreement Proposal (No. 1)   Majority of outstanding shares of common stock eligible to vote   Same effect as a vote against the proposal   Same effect as a vote against the proposal
Golden Parachute Proposal (No. 2)   Majority of shares of common stock represented at the special meeting and entitled to vote   Same effect as a vote against the proposal  

No effect

Adjournment Proposal (No. 3)   Majority of shares of common stock represented at the special meeting and entitled to vote  

Same effect as a vote against the proposal

  No effect

Proposal to Accept the SuperMedia Prepackaged Plan

The votes required, as well as the effects of abstentions/failures to vote and broker non-votes, for stockholders to accept the SuperMedia prepackaged plan are detailed in the following chart:

 

Required Stockholder Vote

  

Effect of Abstentions/

Failures to Vote

  

Effect of Broker Non-Votes

At least 2/3 of common stock that vote to either “accept” or “reject” the SuperMedia prepackaged plan    No effect    No effect

The SuperMedia board of directors urges SuperMedia stockholders to promptly vote by completing, dating and signing the accompanying proxy and ballot and returning it promptly in the enclosed postage-paid envelope. If you hold your stock in “street name” through a bank or broker, please vote by following the voting instructions of your bank or broker.

Stockholders will vote at the meeting by ballot. Votes cast at the meeting, in person or by proxy, will be tallied by SuperMedia’s inspector of election.

As of the record date, directors and executive officers of SuperMedia had the right to vote approximately 395,142 shares of SuperMedia common stock, or approximately 2.5% of the outstanding SuperMedia shares entitled to vote at the special meeting. SuperMedia currently expects that these individuals will vote their shares of SuperMedia common stock in favor of the proposals to be presented at the special meeting. In addition, one of SuperMedia’s directors, John Slater, currently serves as a senior vice president at Paulson & Co. Inc., which beneficially owns 2,607,506 shares of SuperMedia common stock, or approximately 16.8% of the SuperMedia common stock entitled to vote at the SuperMedia special meeting.

 

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Recommendation of the SuperMedia Board of Directors

The SuperMedia board of directors has approved and adopted the merger agreement and the transactions it contemplates. The SuperMedia board of directors has determined that the merger agreement and the transactions it contemplates are advisable and in the best interests of SuperMedia and its stockholders, whether consummated out of court or in Chapter 11 cases. The SuperMedia board of directors unanimously recommends that the SuperMedia stockholders vote “FOR” the proposal to approve and adopt the merger agreement and the transactions it contemplates, vote “FOR” approval, on a non-binding, advisory basis of the compensation that may be paid or become payable to SuperMedia’s named executive officers that is based on or otherwise relates to the transaction, vote “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies and vote to “ACCEPT” the SuperMedia prepackaged plan. See “Proposal 1: The Transaction — SuperMedia’s Reasons for the Transaction; Recommendation of the SuperMedia Board of Directors” for a more detailed discussion of the SuperMedia board of directors’ recommendation.

Attending the Meeting

All holders of SuperMedia common stock, including stockholders of record and stockholders who hold their shares through banks, brokers, nominees or any other stockholder of record, are invited to attend the special meeting. If you are not a stockholder of record, you must obtain a proxy executed in your favor from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the special meeting. If you plan to attend the special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership and you must bring a form of personal photo identification with you in order to be admitted. SuperMedia reserves the right to refuse admittance to anyone without proper proof of share ownership and without proper photo identification.

 

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INFORMATION ABOUT THE BUSINESSES

Dex One Corporation

Overview of Dex One’s Business

Dex One Corporation became the successor to R.H. Donnelley Corporation upon emergence from Chapter 11 on January 29, 2010. In connection with Dex One’s emergence from Chapter 11, it was renamed Dex One Corporation. Dex One’s predecessor was formed on February 6, 1973 as a Delaware corporation. In November 1996, Dex One’s predecessor, then known as The Dun & Bradstreet Corporation, separated through a spin-off into three separate public companies: The Dun and Bradstreet Corporation, ACNielsen Corporation and Cognizant Corporation. In June 1998, The Dun & Bradstreet Corporation separated through a spin-off into two separate public companies: R.H. Donnelley Corporation (formerly The Dun & Bradstreet Corporation) and a new company that changed its name to The Dun & Bradstreet Corporation. Dex One is a marketing solutions company that helps local business and consumers connect with each other. Dex One’s marketing consultants provide helpful service, advice and value to local business in order for them to thrive in an increasingly complex and fragmented marketing landscape. Dex One offers customers a broad portfolio of marketing solutions, from print yellow pages to digital services that leverage consumers’ increasing utilization of local, social and mobile tools. Dex One provides consumers with relevant and trusted information to satisfy their local shopping needs when and how they want. The principal executive offices of Dex One are located at 1001 Winstead Drive, Cary, North Carolina 27513, and its telephone number is (919) 297-1600. Dex One’s corporate internet website is located at www.DexOne.com.

Dex One employs approximately 2,300 individuals, including approximately 650 hourly, and 1,650 salaried, employees and approximately 30 temporary, contract employees. Also, the International Brotherhood of Electrical Workers of America and the Communication Workers of America represent approximately 300 and 400 of the employees, respectively. Dex One’s employees and contract workers perform a variety of critical functions, including sales, customer service, purchasing, publishing and a variety of administrative, accounting, legal, finance, management, technology, supervisory and other related tasks.

Dex One’s Prepetition Indebtedness

A description of Dex One’s prepetition indebtedness may be found in the section entitled “Description of Certain Indebtedness.”

Additional Information

Additional information about Dex One and its subsidiaries, including a full description of the condition and performance of Dex One’s business, is included in documents incorporated by reference in this document, including Dex One’s Annual Report on Form 10-K for the year ended December 31, 2011 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012. See “Where You Can Find More Information.”

SuperMedia Inc.

Overview of SuperMedia’s Business

SuperMedia Inc., is one of the largest yellow pages directory publishers in the United States as measured by revenue. SuperMedia also offers digital advertising solutions. SuperMedia places its clients’ business information into its portfolio of local media solutions, which includes the Superpages directories, Superpages.com, its digital local search resource on both desktop and mobile devices, the Superpages.com network, a digital syndication network that places local business information across more than 250 websites, mobile sites and mobile applications, and its Superpages direct mailers. In addition, SuperMedia offers solutions for social media, digital

 

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content creation and management, reputation management and search engine optimization. SuperMedia became an independent public company in November 2006, when Verizon Communications Inc. (“Verizon”) completed the spin-off of SuperMedia’s shares to its stockholders. Together with its predecessor companies, SuperMedia has more than 125 years of experience in the directory business. SuperMedia primarily operates in the markets in which Verizon or its formerly owned properties now owned by FairPoint Communications, Inc. (“FairPoint”) and Frontier Communications Corporation (“Frontier”) are the incumbent local exchange carriers. SuperMedia has a geographically diversified revenue base covering markets in 32 states for Superpages directories and Superpages direct mailers and in all 50 states for Superpages.com and SuperMedia’s other digital solutions. In 2011, SuperMedia published more than 1,000 distinct directory titles and distributed about 89 million copies of these directories to businesses and residences in the United States. SuperMedia is the official publisher of Verizon, FairPoint and Frontier print directories in the markets in which these companies are the incumbent local telephone exchange carriers. SuperMedia uses the brands Verizon, FairPoint and Frontier on its print directories in these and other specified markets. SuperMedia has a number of agreements with Verizon, FairPoint and Frontier that govern its publishing relationship, including publishing agreements, branding agreements, and non-competition agreements, each of which has a term expiring in 2036. On March 31, 2009, SuperMedia and its domestic subsidiaries filed voluntary petitions for reorganization under Chapter 11 in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division. On December 31, 2009, SuperMedia emerged from bankruptcy protection, and on January 4, 2010, changed its corporate name from Idearc Inc. to SuperMedia Inc. On December 29, 2011, the Bankruptcy Court entered final decrees closing SuperMedia’s bankruptcy cases. The principal executive offices of SuperMedia are located at 2200 West Airfield Drive, D/FW Airport, Texas 75261, and its telephone number is (972) 453-7000. SuperMedia’s corporate internet website is located at www.SuperMedia.com.

SuperMedia employs approximately 3,234 individuals, including approximately 1,142 hourly, and 2,029 salaried, employees and approximately 1,235 temporary, contract employees. Also, the International Brotherhood of Electrical Workers of America and the Communication Workers of America represent approximately 39 and 951 of the employees, respectively. SuperMedia’s employees and contract workers perform a variety of critical functions, including sales, customer service, purchasing, publishing and a variety of administrative, accounting, legal, finance, management, technology, supervisory and other related tasks.

SuperMedia’s Prepetition Indebtedness

A description of SuperMedia’s prepetition indebtedness may be found in the section entitled “Description of Certain Indebtedness.”

Additional Information

Additional information about SuperMedia and its subsidiaries, including a full description of the condition and performance of SuperMedia’s business, is included in the section entitled “Additional Information About SuperMedia” and Appendices M-O, which contain SuperMedia’s consolidated financial statements and related notes at December 31, 2011 and December 31, 2010, for each of the three years in the period ended December 31, 2011, at September 30, 2012 and for the three and nine month periods ended September 30, 2012.

Dex Media, Inc. (named Newdex, Inc. until completion of the transaction)

Dex Media, Inc. is a newly formed Delaware corporation (currently named Newdex, Inc.) and a direct wholly owned subsidiary of Dex One. Newdex was organized on August 17, 2012, solely for the purpose of effecting the transaction. Pursuant to the merger agreement, Dex One will be merged with and into Newdex, with Newdex surviving the merger. After the Dex One merger, each share of common stock of Dex One will have been converted into 0.2 shares of common stock of Newdex, and holders of Dex One common stock will own 100% of the common stock of Newdex. Immediately following the consummation of the Dex One merger, the SuperMedia merger will occur, in which Merger Sub, a direct wholly owned subsidiary of Newdex, will merge

 

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with and into SuperMedia, with SuperMedia surviving the merger as a direct wholly owned subsidiary of Newdex. After the SuperMedia merger with Merger Sub, each share of common stock of SuperMedia will have been converted into 0.4386 shares of common stock of Newdex, and holders of SuperMedia common stock will own approximately 40% of the common stock of Newdex and former holders of Dex One common stock will own approximately 60% of the common stock of Newdex. Dex One currently has a subsidiary named Dex Media, Inc. Dex Media, Inc. is the intermediate holding company of DME and DMW. Dex Media, Inc. will change its name to Dex Media Holdings, Inc. upon consummation of the transaction.

As a result of the transactions contemplated by the merger agreement, SuperMedia will be a direct wholly owned subsidiary of Newdex, and Newdex will change its name to Dex Media, Inc. Dex Media will become a publicly traded corporation, and former SuperMedia and Dex One stockholders will own stock in Dex Media. Newdex has not carried on any activities other than in connection with the transaction. Newdex’s principal executive offices are located at 1001 Winstead Drive, Cary, North Carolina 27513, and its telephone number is (919) 297-1600.

After the consummation of the transaction, the location of Dex Media’s headquarters and principal executive offices will be 2200 West Airfield Drive, P.O. Box 61980, D/FW Airport, Texas 75261, and its telephone number will be (972) 453-7000.

Spruce Acquisition Sub, Inc.

Spruce Acquisition Sub, Inc. is a newly formed Delaware corporation and a direct wholly owned subsidiary of Newdex. The company was formed solely for the purpose of effecting the proposed transaction with SuperMedia and has not carried on any activities other than in connection with the proposed transaction. Pursuant to the merger agreement, Merger Sub will merge with and into SuperMedia. Merger Sub’s address is 1001 Winstead Drive, Cary, North Carolina 27513, and its telephone number is (919) 297-1600.

 

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PROPOSAL 1: THE TRANSACTION

Background of the Transaction

Since emerging from bankruptcy proceedings under Chapter 11 of the Bankruptcy Code in January 2010, Dex One has continued to experience lower advertising sales related to its print products primarily as a result of declines in new and recurring business, including both renewal and incremental sales to existing advertisers. In response to the challenging industry environment, and to build on its existing strengths and assets to maximize value for its stockholders and other constituents, the Dex One board of directors (the “Dex One Board”) has regularly considered financial and strategic options, including potential transactions that would reduce its leverage, extend the maturities of its credit facilities, reduce its refinancing risk, and potential joint ventures, partnerships, acquisitions or other strategic alternatives, both within Dex One’s industry and in complementary industries. As part of the evaluation of its financial and strategic options, Dex One engaged Houlihan Lokey as its financial advisor. Since emerging from bankruptcy proceedings under Chapter 11 in December 2009, the SuperMedia board of directors (the “SuperMedia Board”) has continually evaluated its financial and strategic options in response to the challenging industry environment and in order maximize value for its stockholders and other constituents. As part of the evaluation of financial and strategic options, the SuperMedia Board engaged Chilmark Partners (“Chilmark”) and SuperMedia engaged Morgan Stanley as financial advisors in February 2010. Since their engagement, Chilmark and Morgan Stanley have worked with the SuperMedia Board to evaluate and assess SuperMedia’s strategic and capital structure alternatives, including potential mergers and acquisitions, both within SuperMedia’s industry and in complementary industries.

2011 Proposed Transaction

In February 2011, SuperMedia contacted Dex One to explore potential strategic opportunities between the two companies, including a potential combination or a joint venture. Both parties executed a confidentiality agreement on February 18, 2011 in order for the parties to share limited due diligence information and begin exploratory discussions. In March 2011, SuperMedia and Dex One management met to discuss various strategic opportunities, but the discussions did not advance due to significant differences between the two companies’ expectations.

As part of the Dex One Board’s broader review of all strategic alternatives and options for Dex One, the Dex One Board engaged Houlihan Lokey on March 21, 2011 to assist the Dex One Board in evaluating a range of strategic alternatives, including possible mergers and acquisitions.

On April 27, 2011, representatives of Chilmark and Morgan Stanley met with the SuperMedia Board and summarized the March 2011 discussions between SuperMedia and Dex One. Chilmark and Morgan Stanley also provided the SuperMedia Board with an overview of other potential strategic alternatives available to SuperMedia at that time. At the conclusion of the meeting, the SuperMedia Board directed Chilmark and Morgan Stanley to continue exploratory due diligence and discussion regarding a potential transaction with Dex One.

On June 1 and June 3, 2011, representatives of Houlihan Lokey and Chilmark and Morgan Stanley had preliminary discussions about the possibility of a transaction between SuperMedia and Dex One, exploring the financial and strategic opportunities of a potential merger of the two companies.

Thereafter, at the direction of the Dex One Board and the SuperMedia Board, and, as part of a broader review of all strategic alternatives and options for Dex One and SuperMedia, respectively, representatives of Houlihan Lokey and Dex One management had numerous in-person and telephonic meetings with representatives of Chilmark, Morgan Stanley and SuperMedia management between June 8, 2011 and August 8, 2011. The principal purpose of these meetings was to exchange information and conduct due diligence. During this time, the Dex One Board met on June 15, June 29 and July 20, 2011 to receive updates on the discussions between the financial advisors for the two companies and to continue to discuss strategic alternatives and the rationale for each, including the possibility of a transaction with SuperMedia. At the conclusion of each Dex One

 

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Board meeting, Dex One management and Houlihan Lokey were directed to continue performing exploratory due diligence with SuperMedia, including analyzing SuperMedia’s financial condition and results of operations, analyzing possible transaction structures, quantifying synergies that could be captured by a combination of the two companies, and analyzing potential capital structures, including the possibility of modifying both companies’ credit agreements in connection with a potential merger. Also during this time, the SuperMedia Board met on July 27, 2011 and received an update from representatives of Chilmark and Morgan Stanley on the discussions between the financial advisors for SuperMedia and Dex One. At this meeting, the SuperMedia Board discussed certain strategic alternatives and the rationale for each, including the possibility of a transaction with Dex One and directed SuperMedia’s management and financial advisors to continue exploratory due diligence and discussions regarding a potential transaction with Dex One.

On August 18, 2011, the Dex One Board met and discussed with management and representatives of Houlihan Lokey the various strategic alternatives being considered, including a potential transaction with SuperMedia. As part of its update on a potential transaction with SuperMedia, management and representatives of Houlihan Lokey discussed, among other things, ongoing diligence activities, potential strategic and operational efficiencies from combining the two companies, possible debt restructuring opportunities and potential transaction structures. At the conclusion of the discussion, the Dex One Board directed management to work with Houlihan Lokey and Kirkland & Ellis LLP (“Kirkland & Ellis”), Dex One’s legal counsel, to prepare a draft term sheet contemplating the acquisition of SuperMedia for consideration by the Dex One Board.

On August 22, 2011, management and representatives of Houlihan Lokey and Kirkland & Ellis reviewed with the Dex One Board a draft term sheet for the acquisition of SuperMedia and discussed various strategic, operational, financial and legal aspects of the potential transaction. The discussion focused primarily on the transaction structure that was designed to provide, among other things, a sustainable capital structure for the combined companies going forward by reducing debt at both companies and conditioning the transaction upon the extension of the current maturities of both companies’ credit agreements. At the conclusion of the meeting, the Dex One Board directed Alfred T. Mockett, the Chief Executive Officer of Dex One, to submit the preliminary term sheet to SuperMedia.

On August 23, 2011, Dex One sent a preliminary term sheet to SuperMedia outlining a proposed transaction whereby Dex One would acquire SuperMedia through a proceeding under Chapter 11 with SuperMedia stockholders receiving approximately 37.8% of the common stock of the post-merger company (the “Surviving Company”). The term sheet also provided that the existing Dex One management and board of directors would remain in place, with several SuperMedia directors being added to the board of directors of the Surviving Company. The proposed transaction was also conditioned upon Dex One repurchasing or restructuring $300 million of the Dex One senior subordinated notes and amending its existing credit agreements to extend all maturities to 2018.

On August 25, 2011, the SuperMedia Board met with management and representatives of Chilmark, Morgan Stanley and Fulbright & Jaworski L.L.P. (“Fulbright”), SuperMedia’s outside legal counsel, to discuss the preliminary term sheet received from Dex One. After the SuperMedia Board determined that the Dex One proposal was not in the best interest of SuperMedia or its stockholders, management and representatives of Chilmark and Morgan Stanley discussed a counterproposal to Dex One’s preliminary term sheet with the SuperMedia Board. The counterproposal entailed a proposed transaction whereby SuperMedia stockholders would receive at least 40% of the common stock of the Surviving Company and the board and management would reflect a “merger-of-equals structure.” At the conclusion of the meeting, the SuperMedia Board directed SuperMedia management and its financial advisors to deliver the counterproposal to Dex One.

On August 29, 2011, SuperMedia sent its counterproposal to Dex One. On the same day, a representative of Paulson & Co. Inc. (“Paulson”) sent a letter to Gene Davis, then Chairman of the Dex One Board, expressing Paulson’s support for a transaction between SuperMedia and Dex One and Paulson’s support of Peter J. McDonald, Chief Executive Officer of SuperMedia, to serve as the principal executive officer of the Surviving Company.

 

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Between August 29 and September 1, 2011, representatives of Chilmark, Morgan Stanley and Houlihan Lokey had several telephonic meetings to discuss the two companies’ term sheets and various structuring considerations.

On August 30, 2011, the Dex One Board met with management and representatives of Houlihan Lokey and Kirkland & Ellis. Mr. Davis updated the Dex One Board on a follow-up conversation he had with a representative of Paulson and representatives of Houlihan Lokey and Kirkland & Ellis discussed the counterproposal sent by SuperMedia, various strategic, financial and legal aspects of the proposed transaction and proposed next steps. At the conclusion of the meeting, the Dex One Board directed Houlihan Lokey to meet with SuperMedia’s financial advisors following the holiday weekend to further explain the rationale for Dex One’s August 23 acquisition proposal.

Between September 6 and October 6, 2011, representatives of Chilmark, Morgan Stanley and Houlihan Lokey had numerous conversations to discuss the two companies’ proposals and outstanding due diligence matters, including issues related to the tax attributes of each company and various liabilities of each company.

On September 8, 2011, the Dex One Board met and Dex One management and representatives of Houlihan Lokey provided a report to the Dex One Board on the discussions with Chilmark and Morgan Stanley regarding the preliminary term sheets and potential transaction structures. In addition, Dex One management discussed the status of the ongoing due diligence of SuperMedia, including various SuperMedia liabilities and the tax implications of different transaction structures.

On September 20, 2011, representatives of Chilmark, Morgan Stanley and Fulbright had a telephonic meeting with SuperMedia management to discuss, among other things, the tax analyses associated with various transaction structures and the requirements of SuperMedia’s credit agreements if a transaction with Dex One were to be pursued.

On September 26, 2011, the Dex One Board met and Dex One management and representatives of Houlihan Lokey provided a report to the Dex One Board on the discussions with Chilmark and Morgan Stanley regarding the preliminary term sheets and potential transaction structures. In addition, Dex One management discussed the status of the ongoing due diligence of SuperMedia, including various SuperMedia liabilities and the tax implications of different transaction structures. At the conclusion of the discussion, the Dex One Board directed management, Houlihan Lokey and Kirkland & Ellis to prepare a revised preliminary term sheet and supporting materials and analysis for further consideration by the Dex One Board.

On September 26, 2011, representatives of Chilmark, Morgan Stanley and Fulbright had a telephonic meeting with SuperMedia management to further discuss the requirements of SuperMedia’s credit agreements if a transaction with Dex One were to be pursued.

Also on September 26, 2011, Mr. McDonald and Mr. Mockett met in Dallas, Texas to discuss the proposed transaction.

On October 10, 2011, the Dex One Board met and discussed with management and representatives of Houlihan Lokey and Kirkland & Ellis the analysis the Dex One Board requested at the September 26th meeting, a revised preliminary term sheet contemplating the acquisition of SuperMedia, the rationale for the revised terms and the potential benefits and risks associated with the proposed transaction structure. At the conclusion of the discussion, the Dex One Board directed Mr. Mockett to submit the revised preliminary term sheet to SuperMedia.

On October 11, 2011, Dex One sent a revised preliminary term sheet to SuperMedia proposing a merger whereby SuperMedia stockholders would receive 35% of the common stock of the Surviving Company, existing Dex One management would continue to manage the Surviving Company and the parties would discuss adding representatives of SuperMedia to the board of directors of the Surviving Company.

 

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On October 12, 2011, representatives of Houlihan Lokey, Chilmark and Morgan Stanley had a telephonic meeting to discuss Dex One’s revised preliminary term sheet.

Also on October 12, 2011, representatives of Chilmark, Morgan Stanley and Fulbright had a telephonic meeting with SuperMedia management to discuss Dex One’s October 11 revised preliminary term sheet.

On October 14, 2011, representatives of Chilmark, Morgan Stanley and Fulbright had a telephonic meeting with SuperMedia management to further discuss Dex One’s October 11 revised preliminary term sheet.

On October 25, 2011, representatives of Chilmark had a telephonic meeting with representatives of Houlihan Lokey regarding the proposed transaction structure and various tax issues.

On October 26, 2011, the SuperMedia Board met with representatives of Chilmark, Morgan Stanley and Fulbright to discuss Dex One’s October 11 revised preliminary term sheet, SuperMedia’s proposed response and various capital structure, corporate governance and valuation matters relating to the proposed transaction. The SuperMedia Board directed SuperMedia management and its advisors to continue negotiations with Dex One and to present a counterproposal to Dex One on the terms discussed at the meeting.

On October 26, 2011, SuperMedia sent a counterproposal to Dex One. The terms of the counterproposal included, among other things, a 60%/40% split of equity in the Surviving Company between Dex One and SuperMedia stockholders, respectively, the board of directors of the Surviving Company reflecting a “merger-of-equals structure,” and management of the Surviving Company being determined jointly by the Dex One Board and the SuperMedia Board on a best-in-class, merit-based approach. The counterproposal also conditioned the proposed merger on various de-leveraging actions and amendments to the parties’ respective credit agreements.

On October 28, 2011, the Dex One Board met with management and representatives of Houlihan Lokey and Kirkland & Ellis and discussed SuperMedia’s October 26th counterproposal, along with various outstanding due diligence items. At the conclusion of the meeting, the Dex One Board authorized Mr. Davis to meet with the chairman of SuperMedia to discuss the companies’ respective proposals.

Also on October 28, 2011, representatives of Chilmark and Houlihan Lokey had a telephonic meeting to discuss the specifics of SuperMedia’s October 26th counterproposal.

On October 31, 2011, the Dex One Board met with management and representatives of Houlihan Lokey and Kirkland & Ellis to discuss the proposed transaction with SuperMedia, including a discussion of the modifications to various credit facilities that would be necessary in connection with a combination of the two companies. Also, on this day, representatives of Houlihan Lokey had discussions with representatives of Chilmark and Morgan Stanley regarding ongoing due diligence matters. Representatives of Houlihan Lokey also provided an update on the proposed transaction to the Dex One Board.

On November 2, 2011, the Dex One Board met with management and representatives of Houlihan Lokey and Kirkland & Ellis to discuss the proposed transaction with SuperMedia, including a continuation of the October 31 discussion regarding the modifications to various credit facilities that would be necessary in connection with a combination of the two companies. Also, on this day, Mr. Davis met with SuperMedia’s chairman, Douglas Wheat, to discuss the proposed transaction, the parties’ respective proposals and related matters. In particular, Mr. Davis advocated in favor of the Dex One proposal and Mr. Wheat advocated in favor of the SuperMedia counterproposal.

Between November 7 and 10, 2011, representatives of Chilmark, Morgan Stanley and Houlihan Lokey held numerous discussions regarding the proposed transaction terms and unresolved due diligence items.

 

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On November 12, 2011, the Dex One Board met with management and representatives of Houlihan Lokey and Kirkland & Ellis, each of whom provided an update on the potential transaction with SuperMedia to the Dex One Board, including an update on outstanding due diligence items and unresolved and outstanding transaction terms. At the conclusion of the meeting, the non-management directors of the Dex One Board directed Houlihan Lokey to send a revised preliminary term sheet to SuperMedia.

On November 13, 2011, Houlihan Lokey sent a revised preliminary term sheet to Chilmark and Morgan Stanley, and representatives of Houlihan Lokey had a follow-up discussion with representatives of Chilmark and Morgan Stanley to discuss and explain the revised preliminary term sheet. Among other things, the revised preliminary term sheet proposed a transaction whereby the equity split in the Surviving Company would be 65%/35% between the Dex One and SuperMedia stockholders, respectively, the board of directors of the Surviving Company would be split evenly between Dex One and SuperMedia directors with the Chairman to be appointed by Dex One, and management of the Surviving Company would be selected on a best-in-class, merit-based approach. The proposal was also subject to various confirmatory due diligence.

On November 14, 2011, the SuperMedia Board met with management and representatives of Chilmark, Morgan Stanley, Fulbright and Cleary Gottlieb Steen & Hamilton LLP (“Cleary”), special counsel to SuperMedia, to discuss Dex One’s November 13 proposal. After discussing Dex One’s November 13 proposal, management and representatives of Chilmark and Morgan Stanley discussed the terms of a counterproposal with the SuperMedia Board. At the conclusion of the meeting, the SuperMedia Board directed Chilmark and Morgan Stanley to deliver a counterproposal to Houlihan Lokey that contemplated a transaction whereby the equity split in the Surviving Company would be 62.5%/37.5% between the Dex One and SuperMedia stockholders, respectively, and the Surviving Company would have two-co-chairmen, one appointed by the Dex One Board and one appointed by the SuperMedia Board.

On November 15, 2011, representatives of Chilmark and Morgan Stanley sent the counterproposal to Dex One’s November 13 proposal to representatives of Houlihan Lokey. Later that day, the Dex One Board convened a meeting to discuss the SuperMedia counterproposal with management and representatives of Kirkland & Ellis and Houlihan Lokey. During the discussion, the Dex One Board discussed the ongoing and significant disagreements between the parties, namely, the proposed equity splits, the composition of the board of directors of the Surviving Company, the selection of management of the Surviving Company and satisfactory resolution of certain SuperMedia liabilities. At the conclusion of the meeting, the Dex One Board directed Houlihan Lokey to contact Chilmark and Morgan Stanley to inform them that SuperMedia’s latest proposal was unacceptable and that if SuperMedia was not prepared to continue discussions along the terms outlined in the Dex One November 13 preliminary term sheet, the Dex One Board would not continue negotiations. Thereafter, representatives of Houlihan Lokey contacted Chilmark to relay the foregoing message.

On November 17, 2011, the SuperMedia Board met with management and representatives of Chilmark, Morgan Stanley, Fulbright and Cleary to discuss Dex One’s response to SuperMedia’s November 14 counterproposal. The SuperMedia Board determined that, based on Dex One’s response, it was in the best interest of SuperMedia to discontinue discussions regarding a possible transaction with Dex One and instead focus on SuperMedia’s alternative strategic initiatives. Later that day, Samuel D. Jones, Chief Financial Officer and Treasurer of SuperMedia, sent a letter to Gregory W. Freiberg, EVP and Chief Financial Officer of Dex One, stating that SuperMedia had determined not to proceed with discussions regarding a possible transaction with Dex One. Representatives of Chilmark and Morgan Stanley also contacted Houlihan Lokey on November 17 to reiterate that discussions between SuperMedia and Dex One were terminated.

Following the termination of discussions with SuperMedia in November 2011, the Dex One Board continued, with the assistance of Houlihan Lokey and Kirkland & Ellis, to consider and pursue options for reducing leverage, extending the maturities of its credit facilities, reducing refinancing risk, and exploring joint ventures, partnerships, acquisitions and other strategic alternatives. On March 23, 2012, Dex One subsidiaries

 

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collectively utilized cash on hand of $69.5 million to repurchase $142 million aggregate principal amount of loans under their credit facilities. On April 19, 2012, Dex One utilized cash on hand of $26.5 million to repurchase $98.2 million aggregate principal amount of the Dex One senior subordinated notes. These repurchase transactions provided significant deleveraging for Dex One.

Following the termination of discussions with Dex One in November 2011, the SuperMedia Board also continued, with the assistance of Chilmark and Morgan Stanley, to evaluate its strategic alternatives and to consider and pursue options for reducing its leverage. On December 14, 2011, SuperMedia utilized cash on hand of $117 million to repay approximately $235.2 million of its term loans at a rate of 49.75% of par. On March 2, 2012, SuperMedia utilized cash on hand of $31 million to repay approximately $59.6 million of its term loans at a rate of 52% of par. On May 16, 2012, SuperMedia utilized cash on hand of $33 million to repay approximately $55.9 million of its term loans at a rate of 59% of par. These transactions provided significant deleveraging for SuperMedia.

2012 Proposed Transaction

In January 2012, members of SuperMedia management initiated new internal discussions with representatives of Chilmark and Morgan Stanley regarding potential transactions with Dex One and whether to seek to reengage with Dex One.

During the week of January 9, Mr. McDonald spoke by telephone with Dex One director Alan F. Schultz to assess his interest in potential transactions and to generally discuss the advantages of a transaction between SuperMedia and Dex One.

Also in January 2012, SuperMedia director John Slater called Mr. Davis to discuss the issues that had led to the termination of earlier discussions between the parties: the economics of the proposed transaction, certain liabilities of SuperMedia; board composition and governance; and executive leadership of the Surviving Company. As a result of that discussion, members of the Dex One Board (Jonathan B. Bulkeley, Mark A. McEachen and Mr. Schultz) met with Mr. McDonald. Thereafter, between January 31, 2012 and February 7, 2012, there were several meetings and telephone calls between Mr. McDonald and several members of the Dex One Board to familiarize members of the Dex One Board with Mr. McDonald’s background and arrange meetings with members of the Dex One Board. On February 2, 2012, Mr. McEachen and Mr. McDonald met in Dallas, Texas; on February 6, 2012, Mr. Schultz and Mr. McDonald met in Orlando, Florida; and on February 7, 2012, Mr. McDonald and Mr. Bulkeley spoke by telephone.

On February 15, 2012, the SuperMedia Board met and discussed the industry consolidation trends and the possibility of resuming discussions with Dex One about a combination of Dex One and SuperMedia with management and representatives of Chilmark and Morgan Stanley.

On April 10, 2012, members of SuperMedia management had a telephonic meeting with representatives of Chilmark and Morgan Stanley and discussed the recently announced transaction between Cerberus Capital Management L.P. (“Cerberus”) and AT&T Corp. (“AT&T”) with respect to AT&T’s Advertising Solutions and Interactive units (the “AT&T/Cerberus transaction”) and the implications of the transaction to the industry in general and SuperMedia in particular. The parties also discussed the possibility of restarting discussions with Dex One.

On April 20, 2012, the SuperMedia Board discussed the possibility of restarting discussions with Dex One regarding a combination of Dex One and SuperMedia.

On April 21, 2012, Mr. McDonald and Mr. Davis corresponded via e-mail about the possibility of restarting discussions about a combination of Dex One and SuperMedia.

 

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On April 23, 2012, the SuperMedia Board authorized representatives of Chilmark and Morgan Stanley to contact representatives of Houlihan Lokey about a combination of Dex One and SuperMedia. Later that day, representatives of Chilmark and Morgan Stanley contacted representatives of Houlihan Lokey about restarting the discussions regarding a potential combination of Dex One and SuperMedia.

On April 24, 2012, the Dex One Board met and discussed with management and representatives of Houlihan Lokey and Kirkland & Ellis the AT&T/Cerberus transaction and the implications of the transaction to the industry in general and Dex One in particular. Representatives of Houlihan Lokey also discussed with the Dex One Board the inquiry from Chilmark and Morgan Stanley. At the conclusion of the meeting, and after considering various strategic, operational, financial and legal aspects, the Dex One Board directed management and Dex One’s advisors to explore and evaluate potential industry consolidation opportunities, including revisiting a transaction involving SuperMedia.

Between April 27, 2012 and May 24, 2012, representatives of Houlihan Lokey, Dex One management, representatives of Chilmark and Morgan Stanley and SuperMedia management met numerous times to discuss the companies’ respective 2012 first quarter results of operation and financial performance, preliminary due diligence items, potential synergies of a combination of the two companies and process. During such period, both companies exchanged updated financial, operating and other due diligence information.

On May 1, 2012, the SuperMedia Board met and discussed with management and representatives of Chilmark, Morgan Stanley and Fulbright the AT&T/Cerberus transaction and the implications of the transaction to the industry in general and SuperMedia in particular. Chilmark and Morgan Stanley also presented the SuperMedia Board with a financial comparison of SuperMedia and Dex One and the potential benefits of consolidation. In addition, Chilmark and Morgan Stanley presented the SuperMedia Board with possible alternatives to a transaction with Dex One.

On May 22, 2012, the Dex One Board met with management and representatives of Houlihan Lokey and Kirkland & Ellis to discuss possible strategies to address Dex One’s balance sheet. Representatives of Houlihan Lokey reviewed with the Dex One Board certain SuperMedia financial information and illustrative stand-alone and merger scenarios. At the conclusion of the discussion, the Dex One Board directed management, Houlihan Lokey and Kirkland & Ellis to proceed with more due diligence and to prepare a draft term sheet outlining the essential terms of a business combination with SuperMedia for the Dex One Board’s further review and consideration.

On May 29, 2012, the Dex One Board met with management and representatives of Houlihan Lokey and Kirkland & Ellis to discuss the recent results of operations and financial performance of SuperMedia, outstanding due diligence inquiries with respect to SuperMedia and the status of the discussions between the financial advisors of the two companies. The Dex One Board, management and representatives of Houlihan Lokey and Kirkland & Ellis discussed a proposed preliminary term sheet contemplating a transaction with SuperMedia, as well as various strategic, operational, financial and legal aspects. At the conclusion of the meeting, the non-management members of the Dex One Board directed Houlihan Lokey to distribute the preliminary term sheet to SuperMedia’s financial advisors.

On May 31, 2012, representatives of Houlihan Lokey sent a preliminary term sheet to Chilmark and Morgan Stanley providing for, among other things, a 60%/40% equity split of the Surviving Company between Dex One and SuperMedia stockholders, respectively, a nine person board of directors of the Surviving Company, consisting of five directors designated by Dex One and four directors designated by SuperMedia, and a senior management team determined jointly by the two companies. Later that day, representatives of Chilmark and Morgan Stanley had a telephonic meeting with members of SuperMedia management to discuss Dex One’s preliminary term sheet.

On June 3, 2012, the SuperMedia Board met with management and representatives of Chilmark, Morgan Stanley, Fulbright and Cleary. Chilmark and Morgan Stanley discussed telephonically the terms of Dex One’s

 

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May 31 preliminary term sheet with the SuperMedia Board, comparing both the proposed exchange ratio and relative ownership percentages with those implied by recent market prices as well as the proposed transaction with publicly available information on select precedent merger of equals transactions. The SuperMedia Board then discussed delivering a counterproposal to Dex One, providing for, among other things, a Surviving Company board of directors consisting of twelve members, equally split between six Dex One representatives and six SuperMedia representatives with Mr. McDonald serving as the principal executive officer of the Surviving Company. At the conclusion of the meeting, SuperMedia delivered the counterproposal to the Dex One Board. Later on that day, representatives of Chilmark and Houlihan Lokey had a telephonic meeting to discuss the terms of SuperMedia’s counterproposal.

On June 4, 2012, the non-management members of the Dex One Board met and discussed with representatives of Houlihan Lokey and Kirkland & Ellis the SuperMedia counterproposal. Also on this day, representatives of Houlihan Lokey, Chilmark and Morgan Stanley and Dex One and SuperMedia management held a telephonic meeting to discuss various financial, operating, tax and due diligence items. The non-management members of the Dex One Board then directed Houlihan Lokey and Kirkland & Ellis to prepare a revised preliminary term sheet to send to SuperMedia.

On June 6, 2012, representatives of Houlihan Lokey sent a revised preliminary term sheet to Chilmark and Morgan Stanley providing for, among other things, a Surviving Company board of directors consisting of eleven members, with six directors designated by Dex One and five directors designated by SuperMedia and the chairman to be appointed by Dex One.

On June 7, 2012, members of management of SuperMedia, members of the SuperMedia Board and representatives of Chilmark and Morgan Stanley had a telephonic meeting to discuss Dex One’s June 6 revised preliminary term sheet.

On June 8, 2012, the SuperMedia Board received a draft counterproposal to Dex One’s June 6 preliminary term sheet from representatives from Chilmark. The members of the SuperMedia Board were asked to notify Mr. Wheat if they agreed with the counterproposal. All members of the SuperMedia Board subsequently notified Mr. Wheat that they agreed with the proposed counterproposal.

Also on June 8, 2012, Mr. Davis, Mr. Slater and a representative of Paulson had a meeting to talk generally about a possible transaction between Dex One and SuperMedia and to share thoughts about the status of discussions.

On June 10, 2012, representatives of Chilmark and Morgan Stanley submitted the SuperMedia counterproposal to Houlihan Lokey providing for, among other things, a Surviving Company board of directors consisting of eleven members with five directors to be designated by Dex One, five directors to be designated by SuperMedia and one new independent director to be mutually agreed upon by a nominating committee composed of two directors of Dex One and two directors of SuperMedia. The chairman would be appointed by Dex One and be reasonably acceptable to SuperMedia.

On June 12, 2012, representatives of Houlihan Lokey, Chilmark and Morgan Stanley discussed SuperMedia’s June 10 counterproposal.

On June 13, 2012, the non-management members of the Dex One Board discussed with representatives of Houlihan Lokey and Kirkland & Ellis the SuperMedia counterproposal, and various due diligence, operational, governance, financial and legal aspects of SuperMedia’s June 10 counterproposal. The non-management members of the Dex One Board also discussed a proposed response to SuperMedia’s June 10 counterproposal.

On June 15, 2012, representatives of Houlihan Lokey sent a revised preliminary term sheet to Chilmark and Morgan Stanley providing for, among other things, a Surviving Company board of directors consisting of thirteen persons comprised of six directors designated by Dex One (including the chairman), six directors designated by

 

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SuperMedia and one independent director to be mutually agreed upon by the Dex One Board and the SuperMedia Board; Mr. McDonald as the principal executive officer of the Surviving Company; and senior management determined jointly on a best-in-class, merit based approach. Later that day, representatives of Houlihan Lokey, Chilmark and Morgan Stanley discussed the revised preliminary Dex One term sheet.

Later on June 15, 2012, members of management of SuperMedia, members of the SuperMedia Board and representatives of Chilmark and Morgan Stanley had a telephonic meeting to discuss Dex One’s June 15 revised preliminary term sheet. After the telephonic meeting, the SuperMedia Board received a summary of Dex One’s June 15 revised preliminary term sheet from Chilmark, who informed the SuperMedia Board that Mr. McDonald, Mr. Wheat and Mr. Slater recommended that the SuperMedia Board approve the revised preliminary term sheet. The members of the SuperMedia Board were instructed to notify Mr. Wheat if Dex One’s June 15 revised preliminary term sheet was acceptable. All members of the SuperMedia Board subsequently notified Mr. Wheat that the revised preliminary term sheet was acceptable and representatives of Chilmark and Morgan Stanley were authorized to advise Houlihan Lokey that SuperMedia was willing to proceed on that basis.

On June 17, 2012 representatives of Chilmark and Morgan Stanley called representatives of Houlihan Lokey to advise them that, subject to formal ratification by the SuperMedia Board, SuperMedia was willing to proceed with a transaction on the basis of the Dex One June 15 revised preliminary term sheet.

On June 18, 2012, the SuperMedia Board discussed with representatives of Chilmark, Morgan Stanley, Fulbright and Cleary the proposed transaction with Dex One and, in particular, Dex One’s June 15 revised preliminary term sheet. At the conclusion of the meeting, the disinterested members of the SuperMedia Board voted unanimously to approve and ratify Dex One’s June 15 revised preliminary term sheet and to direct SuperMedia management to explore and negotiate a possible transaction with Dex One based on the terms of the June 15 revised preliminary term sheet.

On June 21 and 23, 2012, the Dex One Board met to discuss the proposed transaction with SuperMedia, and various due diligence, operational, governance, financial and legal aspects. Based on these meetings, the Dex One Board directed management and Kirkland & Ellis to send a draft merger agreement to SuperMedia. At this meeting, the Dex One Board also formed the following ad hoc Dex One Board committees to assist with the proposed transaction with SuperMedia: a Transaction Oversight Committee, a Digital Strategy Committee, an Independent Director Selection Committee and a Management Selection Committee.

On June 22, 2012, representatives of Chilmark and Houlihan Lokey had a telephonic meeting and discussed the expected timeline for the transaction, due diligence matters and the preparation of legal documents.

Also on June 22, 2012, Mr. Davis resigned as non-executive chairman of the Dex One Board. Later that day, Mr. Schultz was appointed to succeed Mr. Davis as non-executive chairman of the Dex One Board.

On June 25, 2012, representatives of Kirkland & Ellis distributed a draft merger agreement to representatives of Fulbright and Cleary, reflecting, among other things, the terms outlined in Dex One’s June 15 preliminary term sheet.

Between June 25, 2012 and July 13, 2012, representatives of Houlihan Lokey, Chilmark, Morgan Stanley, Kirkland & Ellis, Fulbright, Cleary and Dex One and SuperMedia management held numerous in person and telephonic meetings, both among themselves and with each other, to discuss, among other things, open due diligence items, the expected timeline for the proposed transaction, financial projections of the combined company and the proposed modifications to the credit facilities of SuperMedia and Dex One in connection with the proposed transaction.

On June 29, 2012, representatives of Houlihan Lokey, Chilmark, Morgan Stanley, Kirkland & Ellis, Fulbright and Cleary had a telephonic meeting to discuss the timing and process for completing the merger agreement and related documentation.

 

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On June 29, 2012, the Dex One Board met with management to discuss the status of the proposed transaction and received an update on various work streams related to the proposed transaction. That same day, representatives of Houlihan Lokey, Chilmark and Morgan Stanley had a telephonic meeting to discuss various outstanding due diligence items.

On July 6, 2012, the Dex One Board met with management to discuss the status of the proposed transaction.

Between July 6 and August 21, 2012, Dex One management had frequent interaction with the members of the Transaction Oversight Committee and the Digital Strategy Committee as they worked through various strategic and operational due diligence matters, transaction structure, documentation and process matters and integration planning matters.

On July 12 and 13, 2012, the Transaction Oversight Committee met with the Dex One management to conduct an in-depth strategic, financial and operational due diligence review.

Also, on July 13, 2012, representatives of Cleary and Fulbright distributed a mark-up of the merger agreement to Kirkland & Ellis, which, among other things, included revisions to the drafted representations and warranties, revised covenants regarding the operations of each of Dex One and SuperMedia between signing and closing, added provisions regarding indemnification and insurance for SuperMedia directors and officers, and revised the conditions to closing and the parties’ rights to terminate the agreement.

On July 13, 2012, the Dex One Board met to discuss the status of the proposed transaction with management and representatives of Kirkland & Ellis and Houlihan Lokey, including open due diligence items, SuperMedia’s comments to the merger agreement and the proposed modifications to the credit facilities of SuperMedia and Dex One.

Between July 13, 2012 and August 20, 2012, SuperMedia management, Dex One management, and representatives of Houlihan Lokey, Chilmark, Morgan Stanley, Kirkland & Ellis, Fulbright and Cleary held numerous telephonic meetings to discuss, among other things, due diligence items, the merger agreement and ancillary documents such as the shared services agreement and tax sharing agreement, the proposed credit agreement term sheets, the transaction timeline, tax related issues and announcement communications and strategy.

On July 18 and 19, 2012, representatives of Houlihan Lokey, Chilmark and Morgan Stanley had several telephonic meetings to discuss due diligence items, including tax implications of the proposed transaction, and the proposed modifications to the credit facilities of SuperMedia and Dex One.

On July 19, 2012, representatives of Houlihan Lokey, Kirkland & Ellis, Chilmark, Morgan Stanley, Fulbright and Cleary had a telephonic meeting to discuss next steps and process.

On July 20, 2012, the Dex One Board met to discuss the status of the proposed transaction with management and representatives of Kirkland & Ellis and Houlihan Lokey. The discussion focused on strategic alternatives to the proposed SuperMedia transaction, process and timing (including open due diligence items and the revised merger agreement draft), a review of SuperMedia’s business strategy (including digital strategy), updated financial modeling for the combined company and a Dex One digital business review.

Also on July 20, 2012, Dex One management, SuperMedia management and representatives of Houlihan Lokey, Chilmark, Morgan Stanley, Kirkland & Ellis and Cleary held a telephonic meeting to discuss outstanding tax related issues.

On July 24, 2012, the Dex One Board met to discuss the status of the proposed transaction with management and representatives of Kirkland & Ellis and Houlihan Lokey. The discussion focused on directorial fiduciary duties, updated financial modeling for the combined company, open due diligence items, the revised merger agreement draft and the proposed terms of the various credit facility amendments.

 

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On July 25, 2012, the SuperMedia Board met and discussed the status of the proposed transaction with management and representatives of Chilmark, Morgan Stanley, Fulbright and Cleary. The discussion addressed, among other things, the history of discussions with Dex One, the revised draft of the merger agreement, a review of updated financial modeling for the combined company, the terms of precedent transactions and the proposed terms of the various credit facility amendments.

On July 26, 2012, representatives of Houlihan Lokey, Kirkland & Ellis, Chilmark, Morgan Stanley, Fulbright and Cleary had a telephonic meeting to discuss, among other things, the tax implications of the proposed transaction. Later that day, representatives of Kirkland & Ellis distributed a revised merger agreement to representatives of Fulbright and Cleary, which, among other things, reflected a revised transaction structure for tax purposes, revised covenants regarding business operations between signing and closing, revised the closing condition related to a material adverse effect, and revised certain termination rights.

On July 27, 2012, representatives of Houlihan Lokey, Chilmark, Morgan Stanley, Kirkland & Ellis, Fulbright and Cleary held a telephonic meeting to discuss outstanding due diligence and transaction related matters.

On July 31, 2012, Dex One and SuperMedia management and representatives of Houlihan Lokey, Chilmark, Morgan Stanley, Kirkland & Ellis, Fulbright and Cleary had a telephonic meeting to discuss the shared services agreement and related matters.

On August 1, 2012, Dex One and SuperMedia management and representatives of Houlihan Lokey, Chilmark, Morgan Stanley, Kirkland & Ellis, Fulbright and Cleary had a telephonic meeting to discuss the tax sharing agreement and related matters.

On August 2, 2012, members of Dex One and SuperMedia management had a telephonic meeting regarding the status of the discussions and the timeline for the transaction.

On August 3, 2012, representatives of Cleary and Fulbright distributed a mark-up of the merger agreement to Kirkland & Ellis, which, among other things, revised the representations and warranties each party would provide and revised covenants regarding business operations between signing and closing, conditions to closing and termination rights. That same day, representatives of Kirkland & Ellis, Houlihan Lokey, Chilmark, Morgan Stanley, Fulbright and Cleary had a telephonic meeting to discuss the merger agreement and financial and legal due diligence. Later that day, the Dex One Board discussed with management and representatives of Kirkland & Ellis and Houlihan Lokey the status of various work streams associated with the proposed transaction and various governance, operational, financial and legal aspects, including the proposed shared services and tax sharing agreements, transaction structure, proposed credit agreement amendment terms, the mark-up of the merger agreement, ongoing due diligence, and timing and communications.

Between August 3, 2012 and August 14, 2012, Dex One and SuperMedia management and representatives of Houlihan Lokey, Chilmark, Morgan Stanley, Kirkland & Ellis, Fulbright and Cleary held numerous telephonic meetings to discuss open due diligence items and merger agreement terms, including tax structure issues, proposed terms to be offered to the lenders of Dex One and SuperMedia, and integration issues.

On August 9, 2012, the SuperMedia Board met to discuss the status of the proposed transaction with management and representatives of Chilmark, Morgan Stanley, Fulbright and Cleary. The discussions addressed, among other things, the status of the draft transaction documents, the structure of the transaction, the proposed timeline and the communications strategy for the announcement of the proposed transaction.

On August 11, 2012, representatives of Kirkland & Ellis distributed a revised merger agreement to representatives of Fulbright and Cleary, which, among other things, revised the transaction structure to avoid certain change of control concerns.

 

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On August 12, 2012, the Dex One Board met with management and representatives of Houlihan Lokey and Kirkland & Ellis to discuss the proposed transaction. The discussion focused on the status of various work streams associated with the proposed transaction, including timeline and communications, transaction structure, tax considerations, merger agreement and ancillary document status, proposed credit agreement amendment terms and process, and various compensation-related matters.

On August 13, 2012, representatives of Cleary and Fulbright distributed a mark-up of the merger agreement to representatives of Kirkland & Ellis, which, among other things, requested certain tax representations from Dex One and removed delivery of tax opinions as conditions to closing. Later that day, Dex One and SuperMedia management and representatives of Houlihan Lokey, Chilmark, Morgan Stanley, Kirkland & Ellis, Fulbright and Cleary held a telephonic meeting to discuss the merger agreement.

Between August 14 and August 19, 2012, representatives of Kirkland & Ellis, Cleary and Fulbright distributed to each other several revised drafts of the merger agreement, ancillary agreements and disclosure schedules, and through corresponding conversations developed a narrow list of open issues and items.

On August 15, 2012, Dex One and SuperMedia management and representatives of Houlihan Lokey, Chilmark, Morgan Stanley, Kirkland & Ellis, Fulbright and Cleary had a telephonic meeting with representatives of JP Morgan and Deutsche Bank, the agent banks under the companies’ credit agreements, and representatives of Simpson Thacher & Bartlett LLP, legal counsel to the agent banks, to discuss the proposed transaction and proposed modifications to the credit agreements of Dex One and SuperMedia.

On August 16, 2012, Dex One and SuperMedia management and representatives of Houlihan Lokey, Chilmark, Morgan Stanley, Kirkland & Ellis, Fulbright and Cleary held a telephonic meeting to discuss outstanding tax related issues.

On August 16, 2012, the SuperMedia Board met with management and representatives of Chilmark, Morgan Stanley, Fulbright, Cleary and Alvarez & Marsal Transaction Advisory Group, LLC, tax advisor to SuperMedia. Prior to the meeting, the directors received a comprehensive packet that included the current draft of the merger agreement and ancillary agreements (including proposed surviving company charter and bylaws, shared services and tax sharing agreements and credit agreement amendment term sheets), a summary of the merger agreement and other discussion materials to facilitate their review and consideration of the proposed transaction, including financial analyses prepared by Chilmark and Morgan Stanley. During the meeting, representatives of Fulbright and Cleary reviewed certain legal matters with the SuperMedia Board, including the board’s fiduciary duties in connection with the proposed transaction and the terms of the revised merger agreement and the ancillary agreements. Representatives of Morgan Stanley reviewed certain financial analyses related to the proposed transaction with the SuperMedia Board, utilizing multiple methodologies. Management also discussed with the SuperMedia Board the communications plan for the announcement of the proposed transaction, and representatives of Chilmark, Morgan Stanley, Fulbright and Cleary described to the directors the key issues that remained to be resolved with Dex One. The SuperMedia Board discussed their positions on the outstanding issues and directed management and representatives of Chilmark, Morgan Stanley, Fulbright and Cleary to discuss these issues with Dex One and its advisors.

On August 17, 2012, representatives of Houlihan Lokey had a telephonic meeting with various rating agencies to discuss the proposed transaction. That same day, the Dex One Board met with management and representatives of Houlihan Lokey and Kirkland & Ellis. Prior to the meeting the directors received a comprehensive packet that included the current draft of the merger agreement and ancillary agreements (including proposed surviving company charter and bylaws, shared services and tax sharing agreements and credit agreement amendment term sheets), a summary of the merger agreement and other discussion materials to facilitate their review and consideration of the proposed transaction, including financial analyses prepared by Houlihan Lokey. During the meeting, representatives of Kirkland & Ellis reviewed certain legal matters, including the board’s fiduciary duties in connection with the proposed transaction, changes to the merger

 

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agreement since the last meeting of the Dex One Board and the terms of the revised merger agreement and all ancillary agreements. Representatives of Houlihan Lokey reviewed with the Dex One Board the financial analyses Houlihan Lokey performed in coming to the conclusions set forth in its written opinion dated August 20, 2012, referred to below. Representatives of Houlihan Lokey also reviewed with the Dex One Board materials relating to the reverse 1-for-5 stock split of Dex One common stock reflected in the transaction documents. Representatives of Kirkland & Ellis and Houlihan Lokey described for the directors the key issues that remained to be resolved with SuperMedia. The Dex One Board discussed their positions on the issues and directed management and representatives of Kirkland & Ellis and Houlihan Lokey to discuss them with SuperMedia and its advisors.

On August 20, 2012, representatives of Houlihan Lokey, Chilmark, Morgan Stanley, Kirkland & Ellis, Fulbright and Cleary had a meeting with lenders to both Dex One and SuperMedia to discuss the proposed transaction and potential modifications to the credit facilities of Dex One and SuperMedia and potential fees in connection with such modifications. Later that day, representatives from Kirkland & Ellis, Cleary, Fulbright, Houlihan Lokey, Chilmark and Morgan Stanley discussed and resolved all remaining open issues under the merger agreement and all ancillary agreements, subject to the review and approval of the Dex One Board and the SuperMedia Board.

Also on August 20, 2012, after receiving an updated packet of information, the Dex One Board convened, with representatives of management, Kirkland & Ellis and Houlihan Lokey in attendance. Representatives of Kirkland & Ellis discussed the changes in the merger agreement and ancillary agreements since the August 17, 2012 meeting. Representatives of Houlihan Lokey also reviewed with the Dex One Board the proposed fee arrangements for the credit agreement modifications. Representatives of Houlihan Lokey also delivered Houlihan Lokey’s oral opinion to the Dex One Board (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion dated August 20, 2012), to the effect that, as of August 20, 2012 and subject to the assumptions, qualifications and limitations contained in such opinion, the exchange ratio was fair from a financial point of view to the Dex One stockholders. Following discussion, the Dex One Board, taking into account various factors and potential risks, unanimously determined that the merger agreement and the transactions contemplated by the merger agreement, including the mergers, are advisable, desirable and in the best interests of, Dex One and its stockholders, and adopted and approved the merger agreement and the transactions contemplated by the merger agreement, including the mergers.

Also on August 20, 2012, the SuperMedia Board met, with representatives of management, Chilmark, Morgan Stanley, Fulbright and Cleary in attendance. Representatives of Cleary discussed the changes in the merger agreement and ancillary agreements since the August 16, 2012 meeting. Representatives of management, Chilmark and Morgan Stanley reviewed with the SuperMedia Board the preliminary proposal to SuperMedia’s lenders and updated the SuperMedia Board on the communications plan. Representatives of Morgan Stanley also rendered an oral opinion to the SuperMedia Board with respect to the terms of the transaction contemplated at that time, to the effect that, as of August 20, 2012 and subject to certain assumptions, qualifications and limitations (including the assumption that the merger agreement would not be amended), the exchange ratio applicable to SuperMedia common stock contemplated in the form of the merger agreement contemplated at that time was fair from a financial point of view to the SuperMedia stockholders (other than holders of the excluded shares). Following discussion, the disinterested members of the SuperMedia Board, taking into account various factors and potential risks, unanimously determined that the merger agreement and the transactions contemplated by the merger agreement, including the mergers, were advisable, desirable and in the best interests of, SuperMedia and its stockholders, and adopted and approved the merger agreement and the transactions contemplated by the merger agreement, including the mergers.

After the meetings of the Dex One Board and the SuperMedia Board, all parties finalized the form of, and exchanged the final versions of, the merger agreement, disclosure schedules and ancillary agreements, and the merger agreement was executed and delivered.

 

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Prior to the opening of trading on the NYSE and NASDAQ on August 21, 2012, Dex One and SuperMedia issued a joint press release announcing the signing of the merger agreement and filed respective Current Reports on Form 8-K with the SEC disclosing the transaction.

Proposed Financing Amendments

Shortly after the announcement of the transaction, the agents for the Dex One senior secured credit facilities and the SuperMedia senior secured credit facility formed a Steering Committee consisting of certain significant holders of the various SuperMedia and Dex One credit facilities (the “Steering Committee”) to evaluate the transaction. Ultimately, six institutions agreed to join the two administrative agents (the “agents”) on the Steering Committee. The agents hired Simpson Thacher and Bartlett (“Simpson Thacher”) and FTI Consulting, Inc. (“FTI”) as legal and financial advisor, respectively. Between August 20, 2012 and September 18, 2012, Simpson Thacher and FTI conducted due diligence on the transaction.

On August 27, 2012, FTI met with representatives of SuperMedia and Dex One, along with representatives of their financial advisors, Chilmark, Morgan Stanley and Houlihan Lokey, at SuperMedia’s headquarters in Dallas, Texas, to initiate their review of the pro forma combined four year business plan and other financial diligence. Following this meeting, FTI and Simpson Thacher continued their financial and legal diligence with SuperMedia, Dex One and their advisors.

On September 18, 2012, SuperMedia and Dex One’s management and representatives of their financial and legal advisors met with the Steering Committee and their financial and legal advisors at Simpson Thacher’s offices in New York to discuss the proposed financing amendments (the “proposed financing amendments”) to SuperMedia and Dex One’s credit facilities to effectuate the transaction. As a condition to the transaction, SuperMedia and Dex One proposed amending certain key economic provisions to their respective credit facilities including: changing interest rates, extending maturities to December 31, 2016, reducing scheduled amortization and extending the period for discounted repurchases of debt.

In addition to the proposed financing amendments, SuperMedia and Dex One presented to the Steering Committee the transaction rationale, objectives and certain key terms, including: financial implications, including pro forma financial projections, comparison to stand-alone financial metrics and detailed financial projections by credit silo, potential expense synergies and tax asset implications, digital operating strategy and trends and proposed silo-by-silo loan amendment terms. These presentation materials were filed with the SEC that afternoon.

On September 21, 2012, the Dex One Board met with management and representatives of Houlihan Lokey and Kirkland & Ellis to discuss general updates on the status of the transaction, including discussions with the Steering Committee on the proposed financing amendments.

On October 2, 2012, SuperMedia and Dex One received a written response to the proposed financing amendments from the Steering Committee (the “Steering Committee Response”), which proposed generally higher interest rates, higher amortization levels, less flexible excess cash flow provisions and more onerous financial covenants and other key terms on the various credit silos. SuperMedia and Dex One, along with their advisors, reviewed the Steering Committee Response and determined, based on various financial and legal analyses, that it was not acceptable. SuperMedia and Dex One separately reviewed the Steering Committee Response with their respective boards and advisors and discussed how they should respond. After evaluating the Steering Committee Response with their respective management and advisors, the boards of both companies agreed to continue negotiations with the Steering Committee to see whether an acceptable agreement on key economic terms could be reached.

On October 9, 2012, the SuperMedia Board met and discussed with Chilmark, Morgan Stanley, Cleary and Fulbright the Steering Committee Response, terms of a counter-proposal, and alternatives for executing the transaction. The SuperMedia Board directed SuperMedia’s management and financial advisors to work with Dex

 

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One in preparing a counter-proposal to submit to the Steering Committee. On the same day, the Dex One Board met with management and representatives of Houlihan Lokey and Kirkland & Ellis to discuss the Steering Committee Response, terms of a counter-proposal, and standalone considerations and alternatives.

While SuperMedia and Dex One evaluated the Steering Committee Response, both companies and their advisors continued to hold informal discussions with the Steering Committee and its advisors. On October 12, 2012, Dex One and SuperMedia sent a counter-proposal to the agents that proposed, relative to SuperMedia and Dex One’s original proposed financing amendments, revised interest rates, slightly higher amortization levels, tighter financial covenants and other financial terms (the “Counter-Proposal”) that it believed would be more acceptable to the Steering Committee based upon the Steering Committee Response.

On October 15, 2012, SuperMedia and Dex One discussed the Counter-Proposal with the agents and their advisors on a conference call. As the Steering Committee evaluated the Counter-Proposal, SuperMedia and Dex One management continued discussions with the agents on the appropriate process to resolve the negotiations. Although the agents expressed concerns regarding the Counter-Proposal, they agreed that the appropriate next steps were to clarify financial implications of the Counter-Proposal and to ultimately meet in person to see if an agreement could be reached that the Steering Committee, SuperMedia, Dex One and their respective boards could support.

On October 23, 2012, the SuperMedia Board met and discussed with Chilmark, Morgan Stanley, Cleary and Fulbright the status of negotiations with the Steering Committee on the proposed financing amendments.

On October 23, 2012, the Dex One Board met with management and representatives of Houlihan Lokey and Kirkland & Ellis to discuss the status of the transaction, including the status of negotiations with the Steering Committee on the proposed financing amendments.

On October 24, 2012, representatives of SuperMedia, Dex One, the Steering Committee and their respective financial advisors met in the New York offices of Simpson Thacher to attempt to negotiate acceptable amendment terms on each of the SuperMedia and Dex One credit facilities. During this meeting, the parties reached tentative agreement on key amendment terms to the SuperMedia, DMW and RHDI credit facilities. The parties were not able to reach agreement on terms for the DME credit facility, and agreed to continue negotiating these terms after the meeting.

SuperMedia, Dex One and their advisors updated their respective Boards on the October 24 discussions, and continued to do so while the parties negotiated DME terms.

On October 26, 2012, the Dex One Board met with management and representatives of Houlihan Lokey and Kirkland & Ellis to discuss the negotiations in New York on the proposed financing amendments. On November 2, 2012, Mr. Wheat had a conversation with the administrative agent for the SuperMedia credit facility (the “SuperMedia administrative agent”) to discuss the terms of the amendments to the DME credit facility. On November 4, 2012, representatives of the Steering Committee communicated a revised proposal regarding the terms of the amendments to the DME credit facility to representatives of Houlihan Lokey, Chilmark and Morgan Stanley. On November 4, 2012, the Dex One Board met with management and representatives of Houlihan Lokey and Kirkland & Ellis to discuss the Steering Committee’s latest proposal regarding the terms of the amendments to the DME credit facility, as well as a general transaction update. On November 7, 2012, the SuperMedia Board met and discussed with representatives of Chilmark, Morgan Stanley, Cleary and Fulbright the status of negotiations with the Steering Committee, the outcome of Mr. Wheat’s discussion with the SuperMedia administrative agent, and the terms of the amendments to the DME credit facility. The SuperMedia Board approved in principle the proposal for the terms of the amendments to the DME, DMW, RHDI and SuperMedia credit facilities.

On November 8, 2012, the Dex One Board met with management and representatives of Houlihan Lokey and Kirkland & Ellis to discuss certain transaction-related matters, including the latest terms of the amendment to

 

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the DME credit facility. At this meeting the Dex One Board approved in principle the banks’ latest proposal for the terms of the amendments to the DME, DMW, RHDI and SuperMedia credit facilities.

The parties reached an agreement-in-principle on key terms for the amendments to the Dex One and SuperMedia credit facilities on November 8, 2012, when management of SuperMedia and Dex One informed the agents that the SuperMedia Board and Dex One Board had approved in principle the Steering Committee’s latest proposal.

Between November 8, 2012 and December 5, 2012, the parties exchanged drafts of the term sheets for the proposed financing amendments for the SuperMedia and Dex One credit facilities and related documentation, and finalized the term sheets on December 5, 2012.

On December 4 and 5, 2012, the Dex One Board convened, with representatives of management, Kirkland & Ellis and Houlihan Lokey in attendance. Representatives of Kirkland & Ellis discussed the changes to the amended and restated merger agreement and ancillary agreements. Representatives of Houlihan Lokey also delivered Houlihan Lokey’s oral opinion to the Dex One Board (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion dated December 5, 2012), to the effect that, as of the date of the opinion and subject to the assumptions, qualifications and limitations contained in the opinion, the exchange ratio was fair from a financial point of view to the Dex One stockholders. Following discussion, the Dex One Board, taking into account various factors and potential risks as described further below under “Proposal 1: The Transaction —Dex One’s Reasons for the Transaction; Recommendation of the Dex One Board of Directors,” unanimously determined that the amended and restated merger agreement and the transactions contemplated by the merger agreement, including the mergers, are advisable, desirable and in the best interests of, Dex One and its stockholders, and adopted and approved the amended and restated merger agreement and the transactions contemplated by the merger agreement, including the mergers.

Also on December 5, 2012, the SuperMedia Board met, with representatives of management, Chilmark, Morgan Stanley, Fulbright and Cleary in attendance. Representatives of Cleary discussed the changes to the amended and restated merger agreement and ancillary agreements. Representatives of Morgan Stanley also delivered Morgan Stanley’s oral opinion to the SuperMedia Board (which replaced and superseded its August 20, 2012 opinion and was subsequently confirmed in writing by delivery of Morgan Stanley’s written opinion dated December 5, 2012), to the effect that, as of the date of the opinion and subject to the assumptions, qualifications and limitations contained in the opinion, the SuperMedia Exchange Ratio was fair from a financial point of view to the SuperMedia stockholders (other than holders of the excluded shares). Following discussion, the disinterested members of the SuperMedia Board, taking into account various factors and potential risks as further described below under “Proposal 1: The Transaction—SuperMedia’s Reasons for the Transaction; Recommendation of the SuperMedia Board of Directors” unanimously determined that the merger agreement and the transactions contemplated by the merger agreement, including the mergers, are advisable, desirable and in the best interests of, SuperMedia and its stockholders, and adopted and approved the amended and restated merger agreement and the transactions contemplated by the merger agreement, including the mergers.

Following approval, members of Dex One and SuperMedia management executed the amended and restated merger agreement.

Dex One’s Reasons for the Transaction; Recommendation of the Dex One Board of Directors

In evaluating the transaction, the Dex One board of directors consulted with Dex One’s management, as well as with Dex One financial and legal advisors. In reaching its conclusion to approve and adopt the merger agreement as of August 20, 2012 and the transactions it contemplates, the Dex One board of directors considered a variety of factors including the following that the Dex One board of directors viewed as generally supporting its decision to approve the merger agreement and the transactions it contemplates:

 

   

its belief that the transaction brings together two companies with complementary operations and capabilities, which will provide Dex Media with the increased scale, national scope, market share,

 

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financial base and diversified services portfolio necessary to increase stockholder value, enhance value to customers, reduce debt, increase cost efficiencies and stabilize revenues;

 

   

its belief that the transaction will accelerate and leverage the development of Dex One’s digital business;

 

   

its knowledge of the current and prospective environment in which Dex One and SuperMedia operate, including economic, competitive and market conditions;

 

   

its assessment of SuperMedia’s businesses, prospects, operations, earnings generation ability and financial condition and its view of the growth characteristics of SuperMedia’s existing markets and businesses taking into account the results of Dex One’s due diligence review of SuperMedia;

 

   

the strategic alternatives reasonably available to Dex One, including alternative merger or acquisition prospects, restructuring Dex One’s existing capital structure, remaining a stand-alone entity and pursuing acquisitions of strategic assets, and the determination of the Dex One board of directors that a transaction with SuperMedia is a strategic combination which will accelerate Dex One’s ability to achieve its strategic objectives and improve long-term value for Dex One’s stockholders;

 

   

the ability to reduce Dex One’s indebtedness as a result of synergies and increased cash flows of the combined company;

 

   

the improvement in the combined company’s indebtedness situation relative to Dex One’s current indebtedness situation as a result of the financing amendments required by the merger agreement;

 

   

the expected cost synergies from the transaction as presented to the Dex One board of directors at the time of the approval of the transaction, currently estimated by Dex One’s management to be approximately $150-175 million when fully realized, and the belief of the Dex One board of directors that these synergies can be realized by the anticipated management team of Dex Media;

 

   

the expectation that the transaction would allow Dex Media to preserve access to Dex One’s tax attributes of approximately $1.8 billion in total to offset income attributable to the combined company following closing of the transaction;

 

   

the participation of Dex One stockholders in all of the benefits of a significantly larger and more diversified company, including the future growth and expected synergies of Dex Media;

 

   

the fact that Dex One’s stockholders will own approximately 60% of Dex Media on a fully diluted basis immediately after the effective time of the transaction, which reflects the relative sizes of Dex One and SuperMedia;

 

   

the fact that of the then-contemplated ten members of the board of directors of Dex Media, five will be current non-employee Dex One directors designated by Dex One, including the Chairman of the Dex One board of directors, who will serve as Chairman of the Dex Media board of directors following the transaction;

 

   

the review by the Dex One board with management and its advisors of the structure of the transaction and the financial and other terms of the transaction, including the exchange ratio;

 

   

the historical and current market prices of Dex One common stock and SuperMedia common stock, as well as the financial analyses prepared by Houlihan Lokey;

 

   

the financial analysis reviewed by representatives of Houlihan Lokey with the Dex One board of directors, and the oral opinion of Houlihan Lokey to the Dex One board of directors (which was confirmed in writing by delivery of Houlihan Lokey’s written opinion dated August 20, 2012) with respect to the fairness, from a financial point of view, of the exchange ratio to holders of Dex One common stock, as of August 20, 2012, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in preparing its opinion and set forth in the written opinion letter.

 

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the fact that the representations, warranties and covenants of SuperMedia and Dex One are, subject to very limited exceptions, reciprocal; and

 

   

the provisions of the merger agreement that allow Dex One’s board of directors, under certain limited circumstances, to change its recommendation that Dex One’s stockholders vote in favor of the approval of the merger agreement and to furnish information to and participate in discussions or negotiations with third parties who have made unsolicited acquisition proposals, and that provide Dex One’s board of directors with the ability to terminate the merger agreement in order to accept a superior proposal (subject to compliance with certain conditions, and, in certain circumstances, and the payment of an expense reimbursement of up to $7.5 million).

The Dex One board of directors also considered potentially adverse factors and risks in reaching its conclusion, including:

 

   

the possibility that the transaction may not be completed, or that completion may be unduly delayed, for reasons beyond the control of Dex One or SuperMedia;

 

   

the interests of Dex One’s directors and executive officers in the transaction (see “—Interests of Certain Persons in the Transaction—Dex One”);

 

   

the considerable uncertainty as to whether the lender and stockholder approvals needed to complete the transaction will be obtained in a timely manner; and

 

   

the risks of the type and nature described under the caption “Risk Factors” and the matters described under the caption “Cautionary Statement Regarding Forward-Looking Statements” other than those relating to the possible prepackaged plans.

In reaching its conclusion to approve and adopt the amended and restated merger agreement and the transactions it contemplates, the Dex One board of directors considered the changes made to the merger agreement and related documents, including:

 

   

the option for the parties to seek to complete the transaction through prepackaged plans if the required lender and stockholder approvals for an out of court process could not be obtained;

 

   

the revised terms for the financing amendments; and

 

   

the reduction of the Dex Media board of directors to ten members.

The Dex One board of directors again considered a variety of factors, including the following factors the Dex One board of directors viewed as generally supporting its decision to approve the amended and restated merger agreement:

 

   

the factors it considered as supporting its decision to approve the merger agreement of August 20, 2012;

 

   

the increased likelihood that the transaction could be completed by providing a prepackaged plan option;

 

   

the agreement of the Steering Committee to the terms of the revised proposed financing amendments; and

 

   

the financial analysis reviewed by representatives of Houlihan Lokey with the Dex One board of directors, and the oral opinion of Houlihan Lokey to the Dex One board of directors (which was confirmed in writing by delivery of Houlihan Lokey’s written opinion dated December 5, 2012) with respect to the fairness, from a financial point of view, of the exchange ratio to holders of Dex One common stock, as of December 5, 2012, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in preparing its opinion and set forth in the written opinion letter.

 

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The Dex One board of directors also considered potentially adverse factors and risks in reaching its conclusion, including:

 

   

the factors it considered as adverse to its decision to approve the merger agreement of August 20, 2012;

 

   

the relatively less favorable terms of the proposed financing amendments relative to the proposed financing amendments of August 20, 2012; and

 

   

the risks of the type and nature described under the caption “Risk Factors” and the matters described under the caption “Cautionary Statement Regarding Forward-Looking Statements” relating to the filing of prepackaged plans.

The foregoing discussion of the information and factors considered by the Dex One board of directors is not intended to be exhaustive but, we believe, includes all material factors considered by the Dex One board of directors. In view of the wide variety of factors considered and the complexity of these matters, the Dex One board of directors did not assign relative weights to the above factors or the other factors considered by it. In addition, the Dex One board of directors did not reach any specific conclusion on each factor considered, but conducted an overall analysis of these factors. Individual members of the Dex One board of directors may have given different weights to different factors.

Based on the factors outlined above, the Dex One board of directors has determined that the merger agreement and the transactions it contemplates are advisable, fair to, and in the best interests of, Dex One’s stockholders. The Dex One board of directors unanimously recommends that Dex One’s stockholders vote “FOR” the approval and adoption of the merger agreement and the transactions it contemplates.

SuperMedia’s Reasons for the Transaction; Recommendation of the SuperMedia Board of Directors

In evaluating the transaction, the SuperMedia board of directors consulted with SuperMedia’s management, as well as with SuperMedia financial and legal advisors. In reaching its conclusion to approve and adopt the merger agreement as of August 20, 2012 and the transactions it contemplates, the SuperMedia board of directors considered a variety of factors including the following that the SuperMedia board of directors viewed as generally supporting its decision to approve the merger agreement and the transactions it contemplates:

 

   

its belief that the transaction brings together two companies with complementary operations and capabilities, which will provide Dex Media with the increased scale, national scope, market share, financial base and diversified services portfolio necessary to increase stockholder value, enhance value to customers, reduce debt, increase cost efficiencies and stabilize revenues;

 

   

its belief that the transaction will accelerate and leverage the development of SuperMedia’s digital business;

 

   

its knowledge of the current and prospective environment in which Dex One and SuperMedia operate, including economic, competitive and market conditions;

 

   

its assessment of Dex One’s businesses, prospects, operations, earnings generation ability and financial condition and its view of the growth characteristics of Dex One’s existing markets and businesses, taking into account the results of SuperMedia’s due diligence review of Dex One;

 

   

the strategic alternatives reasonably available to SuperMedia, including alternative merger or acquisition prospects, restructuring SuperMedia’s existing capital structure, remaining a stand-alone entity and pursuing acquisitions of strategic assets, and the determination of the SuperMedia board of directors that a transaction with Dex One is a strategic combination that will accelerate SuperMedia’s ability to achieve its strategic objectives and improve long-term value for SuperMedia’s stockholders;

 

   

the ability to reduce SuperMedia’s indebtedness as a result of synergies and increased cash flows of the combined company;

 

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the improvement in the combined company’s indebtedness situation relative to SuperMedia’s current indebtedness situation as a result of the financing amendments required by the merger agreement;

 

   

the expected cost synergies from the transaction as presented to the SuperMedia Board at the time of its approval of the transaction, currently estimated by SuperMedia’s management to be approximately $150-175 million when fully realized, and the belief of the SuperMedia board of directors that these synergies can be realized by the anticipated management team of Dex Media;

 

   

the expectation that the transaction would enable Dex Media to utilize Dex One’s tax attributes of approximately $1.8 billion in total to offset income attributable to the combined company following closing of the transaction;

 

   

the participation of SuperMedia stockholders in all of the benefits of a significantly larger and more diversified company, including the future growth and expected synergies of Dex Media;

 

   

the fact that SuperMedia’s stockholders will own approximately 40% of Dex Media on a fully diluted basis immediately after the effective time of the transaction, which reflects the relative sizes of Dex One and SuperMedia;

 

   

the fact that of the then-contemplated ten members of the board of directors of Dex Media, four will be current non-employee SuperMedia directors designated by SuperMedia;

 

   

the fact that the current Chief Executive Officer and President of SuperMedia, Mr. McDonald, will be the Chief Executive Officer and President of Dex Media, and a member of its board of directors, upon completion of the transaction;

 

   

the review by the SuperMedia board with management and its advisors of the structure of the transaction and the financial and other terms of the transaction, including the exchange ratio;

 

   

the historical and current market prices of Dex One common stock and SuperMedia common stock, as well as the financial analyses prepared by Morgan Stanley and Chilmark;

 

   

the opinion rendered by Morgan Stanley to the SuperMedia board of directors at the meeting on August 20, 2012 with respect to the terms of the transaction contemplated at that time to the effect that, as of such date, and based upon and subject to the various assumptions, considerations, qualifications and limitations (including the assumption that the merger agreement would not be amended), the exchange ratio applicable to SuperMedia common stock contemplated in the form of the merger agreement contemplated at that time was fair from a financial point of view to the holders of shares of SuperMedia common stock (other than the excluded shares);

 

   

the fact that the representations, warranties and covenants of SuperMedia and Dex One are, subject to very limited exceptions, reciprocal; and

 

   

the provisions of the merger agreement that allow SuperMedia’s board of directors, under certain limited circumstances, to change its recommendation that SuperMedia’s stockholders vote in favor of the approval of the merger agreement and to furnish information to and participate in discussions or negotiations with third parties who have made unsolicited acquisition proposals, and that provide SuperMedia’s board of directors with the ability to terminate the merger agreement in order to accept a superior proposal (subject to compliance with certain conditions and, in certain circumstances, the payment of an expense reimbursement of up to $7.5 million).

The SuperMedia board of directors also considered potentially adverse factors and risks in reaching its conclusion, including:

 

   

the possibility that the transaction may not be completed, or that completion may be unduly delayed, for reasons beyond the control of Dex One or SuperMedia;

 

   

the interests of SuperMedia’s directors and executive officers in the transaction (see “—Interests of Certain Persons in the Transaction—SuperMedia”);

 

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the considerable uncertainty as to whether the lender and stockholder approvals needed to complete the transaction will be obtained in a timely manner; and

 

   

the risks of the type and nature described under the caption “Risk Factors” and the matters described under the caption “Cautionary Statement Regarding Forward-Looking Statements.”

In reaching its conclusion to approve and adopt the amended and restated merger agreement and the transactions it contemplates, the SuperMedia board of directors considered the changes made to the merger agreement and related documents, including:

 

   

the option for the parties to seek to complete the transaction through prepackaged plans if the required lender and stockholder approvals for an out of court process could not be obtained;

 

   

the revised terms for the financing amendments; and

 

   

the reduction of the Dex Media board of directors to ten members.

The SuperMedia board of directors again considered a variety of factors, including the following factors the SuperMedia board of directors viewed as generally supporting its decision to approve the amended and restated merger agreement:

 

   

the factors it considered as supporting its decision to approve the merger agreement of August 20, 2012;

 

   

the increased likelihood that the transaction could be completed by providing a prepackaged plan option;

 

   

the agreement of the Steering Committee to the terms of the revised proposed financing amendments; and

 

   

the opinion delivered on December 5, 2012 to the SuperMedia board of directors by Morgan Stanley (which replaced and superseded the opinion rendered on August 20, 2012) to the effect that, as of the date of its opinion, and based upon and subject to the various assumptions, considerations, qualifications and limitations set forth in its written opinion, the SuperMedia Exchange Ratio was fair from a financial point of view to the holders of shares of SuperMedia common stock (other than the excluded shares), as more fully described below in the section entitled “—Opinion of Morgan Stanley.”

The SuperMedia board of directors also considered potentially adverse factors and risks in reaching its conclusion, including:

 

   

the factors it considered as adverse to its decision to approve the merger agreement of August 20, 2012;

 

   

the relatively less favorable terms of the proposed financing amendments relative to the proposed financing amendments of August 20, 2012; and

 

   

the risks of the type and nature described under the caption “Risk Factors” and the matters described under the caption “Cautionary Statement Regarding Forward-Looking Statements” relating to the filing of prepackaged plans.

The foregoing discussion of the information and factors considered by the SuperMedia board of directors is not intended to be exhaustive but, we believe, includes all material factors considered by the SuperMedia board of directors. In view of the wide variety of factors considered and the complexity of these matters, the SuperMedia board of directors did not assign relative weights to the above factors or the other factors considered by it. In addition, the SuperMedia board of directors did not reach any specific conclusion on each factor considered, but conducted an overall analysis of these factors, including discussions with SuperMedia management and outside legal and financial advisors. Individual members of the SuperMedia board of directors may have given different weights to different factors.

Based on the factors outlined above, the SuperMedia board of directors, with Messrs. McDonald and Slater abstaining from the vote, has determined that the merger agreement and the transactions it contemplates are

 

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advisable, fair to, and in the best interests of, SuperMedia’s stockholders. The board of directors of SuperMedia unanimously recommends that SuperMedia’s stockholders vote “FOR” the approval and adoption of the merger agreement and the transactions it contemplates.

Opinion of Dex One’s Financial Advisor

Opinion of Houlihan Lokey Capital, Inc.

On December 5, 2012 Houlihan Lokey rendered an oral opinion to the Dex One board of directors (which was confirmed in writing by delivery of Houlihan Lokey’s written opinion dated December 5, 2012) to the effect that, as of December 5, 2012, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken, as set forth in the written opinion, and other matters considered by Houlihan Lokey in preparing its opinion, the exchange ratio was fair, from a financial point of view, to holders of Dex One common stock.

Houlihan Lokey’s opinion was directed to the Dex One board of directors and only addressed the fairness from a financial point of view of the exchange ratio and does not address any other aspect or implication of the merger agreement or the transactions it contemplates. The summary of Houlihan Lokey’s opinion in this document is qualified in its entirety by reference to the full text of its written opinion, which is included as Appendix D to this document and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in preparing its opinion. However, neither Houlihan Lokey’s opinion nor the summary of its opinion and the related analyses set forth in this document are intended to be, and do not constitute, advice or a recommendation to the Dex One board of directors or any stockholder as to how to act or vote with respect to the mergers or related matters.

Houlihan Lokey’s opinion did not address the prepackaged plans, and Houlihan Lokey did not express any opinion or recommendation as to any other terms of the prepackaged plans or the aggregate terms of the prepackaged plans, or any other plan of reorganization under the Bankruptcy Code.

In arriving at its December 5, 2012 opinion, Houlihan Lokey, among other things:

 

   

reviewed the following agreements and documents:

 

   

A final draft of the merger agreement;

 

   

Amended and Restated Certificate of Incorporation of Dex One Corporation (f/k/a R.H. Donnelley Corporation) dated January 29, 2010; and

 

   

A draft of the Amended and Restated Certificate of Incorporation of Newdex, Inc., including certain transfer restrictions intended to ensure preservation of the tax attributes currently anticipated to result from the mergers (the “Preservation of Tax Benefits Provision”);

 

   

reviewed certain publicly available business and financial information relating to Dex One and SuperMedia that Houlihan Lokey deemed to be relevant;

 

   

reviewed certain information relating to the historical, current and future operations, financial condition and prospects of Dex One and SuperMedia made available to Houlihan Lokey by Dex One and SuperMedia, including (a) financial projections prepared by the respective management of Dex One and SuperMedia relating to Dex One and SuperMedia for the years ending 2012 through 2016 (the “Projection Period”), (b) certain forecasts and estimates of potential cost savings, operating efficiencies and other synergies expected to result from the transaction (including the Amend and Extend Transactions (as defined below)), together with certain forecasts and estimates of the costs associated with achieving such cost savings, operating efficiencies and other synergies, all as prepared by the

 

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respective management of Dex One and SuperMedia (the “Synergies”), (c) certain forecasts and estimates involving the outstanding amounts, and terms of, the aggregate debt of Dex Media on a consolidated basis pro forma for the mergers (the “Amend and Extend Transactions”) during the Projection Period (the “Amend and Extend Terms”), and (d) estimated amounts and usages of tax attributes, prepared by the management of Dex One, relating to (1) Dex One on a stand-alone basis (the “Dex One Tax Attributes”), and (2) Dex Media, pro forma for the transaction (including the Amend and Extend Transactions) (the “Dex Media Tax Attributes”);

 

   

discussed with certain members of respective management of Dex One and SuperMedia and with certain of their representatives and advisors, regarding (a) the respective businesses, operations, financial condition and prospects, both on a stand-alone basis and pro forma for the transactions contemplated by the merger agreement, of Dex One, SuperMedia and Dex Media, (b) the transactions contemplated by the merger agreement and (c) related matters;

 

   

considered the publicly available financial terms of certain transactions that Houlihan Lokey deemed to be relevant;

 

   

reviewed the current and historical market prices and trading volume for certain of Dex One’s and SuperMedia’s bank loans and publicly traded securities;

 

   

compared the relative contributions of Dex One and SuperMedia to certain financial statistics of Dex One and SuperMedia on a combined basis (but not pro forma for the transaction or the Amend and Extend Transactions); and

 

   

conducted such other financial studies, analyses and inquiries and considered such other information and factors as Houlihan Lokey deemed appropriate.

Houlihan Lokey relied upon and assumed, without independent verification, the accuracy and completeness of all data, material and other information furnished, or otherwise made available, to Houlihan Lokey, discussed with or reviewed by Houlihan Lokey, or publicly available, and did not assume any responsibility with respect to such data, material and other information. In addition, the respective management of Dex One and SuperMedia advised Houlihan Lokey, and Houlihan Lokey assumed, that the financial projections reviewed by Houlihan Lokey were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of such managements as to the future financial results and condition of (1) Dex One and SuperMedia, respectively, and (2) Dex Media, and Houlihan Lokey expressed no opinion with respect to such projections or the assumptions on which they are based. Furthermore, upon the advice of (1) management of Dex One and SuperMedia, Houlihan Lokey assumed that the estimated Synergies and Dex Media Tax Attributes reviewed by Houlihan Lokey were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of the respective management of Dex One and SuperMedia and that each of the Synergies and Dex Media Tax Attributes will be realized in the amounts and the time periods indicated thereby and Houlihan Lokey expressed no opinion with respect to such Synergies or Dex Media Tax Attributes or the assumptions on which they are based, and (2) management of Dex One, Houlihan Lokey assumed that the estimated Dex One Tax Attributes reviewed by Houlihan Lokey were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of the management of Dex One and that the Dex One Tax Attributes would be realized by Dex One on a stand-alone basis in the amounts and the time periods indicated thereby and Houlihan Lokey expressed no opinion with respect to such Dex One Tax Attributes or the assumptions on which they are based. Houlihan Lokey relied upon and assumed that the Amend and Extend Terms will be implemented upon consummation of the mergers, and Houlihan Lokey expressed no opinion regarding the fairness of the exchange ratio or any other portion or aspect of the mergers in the event the terms of refinanced debt of either Dex One or SuperMedia are on terms materially less advantageous than the Amend and Extend Terms. Houlihan Lokey relied upon and assumed, without independent verification, that there was no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of Dex One or SuperMedia since the respective dates of the most recent information, financial or otherwise, provided to Houlihan Lokey that would be material to Houlihan Lokey’s analyses or its Opinion (other than as otherwise reflected in the financial projections below), and that there was no information or any facts that would make any of the information

 

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reviewed by Houlihan Lokey incomplete or misleading. In reaching its conclusions thereunder, with the consent of the Dex One board of directors, Houlihan Lokey did not perform a selected companies analysis in light of the absence of any sufficiently similarly situated companies in the publishing and directory industries for which public information was available so as to be able to make any meaningful comparisons.

Houlihan Lokey relied upon and assumed, without independent verification, that (a) the representations and warranties of all parties to the agreements identified above and all other related documents and instruments that are referred to therein were true and correct, (b) each party to all such agreements and such other related documents and instruments would fully and timely perform all of the covenants and agreements required to be performed by such party (other than those relating to the prepackaged plans), (c) all conditions to the consummation of the transactions contemplated by the merger agreement would be satisfied without waiver thereof (other than those relating to the prepackaged plans), and (d) the transactions contemplated by the merger agreement would be consummated in a timely manner in accordance with the terms described in all such agreements and such