1YLO_chart.pngYellow Media Inc (TSE:YLO) corrected up, providing a rare opportunity for longs to profit on their stock. The company remains troubled by their debts and is taking drastic measures to get out of the hole.

YLO stopped the drop at 15 cents, where the price found a temporary support. The stock added nearly 15% during Friday’s session, on what may prove to be only a temporary recovery.

YLO lost 72% over the past 5 days, thus naturally the stock looks oversold and the correction was actively pursuit by traders.

Relating to the worsening financial situation of the company, Yellow Media announced on Wednesday they will be eliminating dividend payments to common shareholders. This forced a massive selloff even before the last payment of $0.025 per share, which will be made on October 17, 2011.

Yellow Media said they will record a goodwill impairment charge of $2.9 billion in a third quarter. The amount was determined after running tests on goodwill and other long term assets. The amount is non-cash and won’t have any effect on the company’s operating activities, but will have a substantial negative effect on their balance sheet.

Following the downgrade of its credit ratings the manageyellow_media_inc_logo.jpgment also agreed to amend their credit agreement. The company is pursuing a plan to substantially decrease their debt, which currently amounts to nearly $2.3 billion.