Reuters – Shareholders in Italy’s Seat Pagine Gialle gave the go ahead on Tuesday for a plan aimed at relaunching the heavily indebted Italian yellow pages publisher, allowing creditors to take control of the struggling company.
Measures voted by shareholders include a near 20 million euro cash call reserved for creditors that will see current investors diluted to just 0.25 percent of capital.
Royal Bank of Scotland and bondholders will forego debt of around 650 million euros ($893 million) and 837 million euros respectively to become the new owners of the company.
Cash-strapped Seat, which has a market value of 26 million euros, is caught up in a long drawn-out Italian-led court restructuring, similar to Chapter 11 bankruptcy, that has already caused losses for lenders.
The company, once the darling of the dot.com era, has struggled to manage its debt pile following a 5.7 billion euro buyout in 2003 by private equity companies CVC, Permira and Investitori Associati.
The mountain of debt taken on by a series of private equity owners became increasingly difficult to handle amid the global credit crisis.
Like other directories firms, including France’s PagesJaunes and Yell in Britain, Seat has been struggling to reduce debts and fight competition from Internet search giants such as Google .
Shareholders on Tuesday also voted to file a legal action against 17 former board members at the group, accusing them of causing damage of around 2.4 billion euros in the period 2003-2012. In a joint statement, the former board members in question rejected the accusation as groundless.
At the end of October Seat had debt of more than 1.4 billion euros.