It was a Bay Street beat-down last month for Yellow Media Inc (TSX: YLO, OTC: YLWPF), which suffered a series of public blows despite the fact that the only real news, toward the latter half of the month, was, if anything, positive. But Yellow suffered a downgrade or a price-target reduction from just about every analyst who covers the stock and loud calls for management to slash by half or even eliminate entirely its CAD0.0542 per month dividend payment in favor of de-leveraging the balance sheet, which includes CAD2.1 billion in debt.

The buy-hold-sell line on Bay Street, Canada’s Toronto-based equivalent to New York’s Wall Street, is zero-10-two, not a pretty one considering the judges notoriously skew bullish in their ratings. Bloomberg standardizes otherwise discrete terminology brokerage houses use to indicate their feelings about stocks. But there’s no way to describe the eyes Yellow Media at this point as anything but jaundiced.

There’s no question that Yellow’s is a difficult road. It will be made easier with the cash from the Trader sale, which will allow it to reduce its leverage ratios. At least one observer, however, presents an analysis that suggests Yellow Media can cover its current payout, support growth and meet its costs into 2012, which gives it still more time to prove its case to what’s now a skeptical (for them) jury of analysts.

Commenting on the Trader deal, DBRS forecast on Jun. 30 that the CAD745 million in cash Apax Partners is paying for the asset will allow Yellow to shave its debt-to-EBITDA (earnings before interest, tax, depreciation and amortization) ratio from 2.74 to around 2.0, which the Canadian bond rater believes positions it better for what will remain a bumpy ride until Internet operations are sufficient to sustain the business and the payout.

Print directories will remain the biggest contributor to revenue following the Trader disposition. And this business faces “significant risks as it transforms from a print-placement and listing organization into an online/digital media and marketing service provider.” DBRS has maintained all its ratings on Yellow Media, with a “stable” trend.

This guarded, at best, optimism is rooted in Yellow Media’s “reasonable” progress in the early stages of its shift, as more than 25 percent of Directories revenue was from the digital side of the business in the first quarter of 2011, up from 18 percent a year ago. Too, DBRS cites “relatively steady EBITDA and cash flow from operations.”

But, as even CEO Marc Tellier conceded in an interview in May, shortly after the release of results, Yellow won’t satisfy the many who question the survival of the dividend–the business, even–until online revenue reaches parity with print revenue. And Mr. Tellier is still unable to set a timeline for when that might happen, when its transformation from ugly print duckling to 21st century Internet swan will be completed.

It might never happen, at least according to a Credit Suisse analyst who downgraded Yellow from “neutral” (translated to “hold” in the Bloomberg system) to “underperform” (or “sell”) and reduced his 12-month price target for the stock from CAD5 to CAD2 based on “accelerating” declines on the print side of the business. Credit Suisse noted that in Edmonton the number of advertising pages in Yellow’s most recent book was down 14 percent from a year earlier, faster than a 2009-to-2010 decline of 12 percent and 3 percent the year before that. The analyst cited double-digit declines in other urban markets.

The concern is that online/digital revenue won’t accelerate fast enough to make up for these declines. Other investors go a step further, pointing out the “absurdity” of Yellow Media paying a dividend with a debt burden so large.

“It’s ridiculous,” said CEO Paul Tepisch of High Rock Capital Management, which holds Yellow Media debt, “that they are paying a dividend given the leverage in the business.” The quickest way to make short sellers go away and put the company back on firmer footing, Mr. Tepish told the Toronto Globe and Mail, is to make a full commitment to reduce the leverage on the balance sheet. “They have a glorious opportunity to do the right thing and right-size their capital structure and come out of this stronger.”

The hope is that the CAD745 million from Trader–once all approvals are had–will take enough of a bite out of its CAD2.1 billion debt that Yellow will avoid a credit-rating downgrade, which would, in turn, bring on tighter loan covenants that could include strictures on future dividends. According to a statement released by Yellow on the deal’s approval by Investment Canada, the company said completion of the sale “remains subject to satisfaction of other customary conditions.”

Following a longer-than-anticipated review period, it won’t close during the second quarter, as forecast when the deal was announced back in March. It’s now expected to close this month.

Once one of the best, brightest income trusts, Yellow Media now sports a 24.2 percent yield, based on an annualized payout of CAD0.65 per share and a Jul. 7 closing price of CAD2.69. If it gets cut in half, the yield is still 12.1 percent. At this point it’s for the adventurous only.

The Roundup

Here are estimated (in most cases) and confirmed (for a handful) second-quarter reporting dates for the CE Portfolio. We’ll update the list as official dates are announced.

Conservative Holdings

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–Jul. 29 (estimate)
• Artis REIT (TSX: AX-U, OTC: ARESF)–Aug. 11 (estimate)
• Atlantic Power Corp (TSX: ATP, NYSE: AT)–Aug. 9 (estimate)
• Bird Construction Inc (TSX: BDT, OTC: BIRDF)–Aug. 5 (estimate)
• Brookfield Renewable Power Fund (TSX: BRC-U, OTC: BRPUF)–Aug. 9 (estimate)
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)–Aug. 10 (estimate)
• Capstone Infrastructure Corp (TSX: CSE, OTC: MCQPF)–Aug. 9 (estimate)
• Cineplex Inc (TSX: CGX, OTC: CPXGF)–Aug. 12 (estimate)
• Colabor Group Inc (TSX: GCL, OTC: COLFF)–Jul. 7 (estimate)
• Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF)–Aug. 10 (estimate)
• Extendicare REIT (TSX: EXE-U, OTC: EXETF)–Aug. 5 (estimate)
• IBI Group Inc (TSX: IBG, OTC: IBIBF)–Aug. 4 (estimate)
• Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF)–Aug. 10 (confirmed)
• Just Energy Group Inc (TSX: JE, OTC: JUSTF)–Aug. 12 (estimate)
• Keyera Corp (TSX: KEY, OTC: KEYUF)–Aug. 3 (confirmed)
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)–Aug. 9 (confirmed)
• Pembina Pipeline Corp (TSX: PPL, OTC: PBNPF)–Aug. 5 (estimate)
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–Jul. 29 (estimate)
• TransForce Inc (TSX: TFI, OTC: TFIFF)–Aug. 1 (confirmed)

Aggressive Holdings

• Acadian Timber Corp (TSX: ADN, OTC: ACAZF)–Jul. 27 (confirmed)
• Ag Growth International Inc (TSX: AFN, OTC: AGGZF)–Aug. 11 (estimate)
• ARC Resources Ltd (TSX: ARX, OTC: AETUF)–Aug. 4 (estimate)
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–Jul. 28 (estimate)
• Daylight Energy Ltd (TSX: DAY, OTC: DAYYF)–Aug. 3 (estimate)
• EnerCare Inc (TSX: ECI, OTC: CSUWF)–Aug. 9 (estimate)
• Enerplus Corp (TSX: ERF, NYSE: ERF)–Aug. 5 (confirmed)
• Newalta Corp (TSX: NAL, OTC: NWLTF)–Aug. 5 (estimate)
• Parkland Fuel Corp (TSX: PKI, OTC: PKIUF)–Aug. 12 (estimate)
• Penn West Petroleum Ltd (TSX: PWT, NYSE: PWE)–Aug. 4 (estimate)
• Perpetual Energy Inc (TSX: PMT, OTC: PMGYF)–Aug. 10 (estimate)
• Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF)–Aug. 11 (estimate)
• PHX Energy Services Corp (TSX: PHX, OTC: PHXHF)–Aug. 5 (estimate)
• Provident Energy Ltd (TSX: PVE, NYSE: PVX)–Aug. 11 (estimate)
• Vermilion Energy Inc (TSX: VET, OTC: VEMTF)–Aug. 9 (estimate)
• Yellow Media Inc (TSX: YLO, OTC: YLWPF)–Aug. 5 (estimate)