Seat CEO in last-ditch bid to avoid insolvency

* Big bank lenders endorse restructuring-source

* No endorsement yet from 40 pct of bank lenders-source

* Seat board seeks 2 more weeks to finalise restructuring

By Danilo Masoni

MILAN, Nov 30 (Reuters) - Seat Pagine Gialle Chief Executive Alberto Cappellini has no more than two weeks to win full support from creditor banks and save the debt-laden Italian directories group from insolvency proceedings.

Seat said late on Tuesday it would not pay a coupon on a 1.3 billion euro junior bond, called Lighthouse, due by Wednesday, meaning the company has technically defaulted.

It missed the payment after failing to win enough support from creditors for a proposal to restructure its 2.7 billion euro ($3.6 billion) net debt.

The plan needs approval from all of Seat's senior lenders, a group of about 70 Italian and foreign banks led by Britain's Royal Bank of Scotland , and at least 75 percent of the Lighthouse holders.

As of late Tuesday, 60 percent of the senior bank lenders had endorsed the restructuring, which foresees the conversion of a 1.2 billion euro portion of the Lighthouse bond into shares, a source briefed about the situation said.

Support from the junior bondholders met the requirement.

Cappellini, who took the helm of Seat in 2009 and refocused the group on product innovation, must now convince the minority of banks which have not formalized their approval. He must also avoid defections among Lighthouse bondholders.

"Big banks have already given their approval," a source close to the matter said on Wednesday.

In addition to Royal Bank of Scotland, Seat's major bank lenders include UniCredit , Intesa Sanpaolo and BNP Paribas .

Seat is helped by advisers from Italy's Giliberti Pappalettera Triscornia, Linklaters and Rothschild.

Seat's board is now asking Lighthouse bondholders to postpone the missed 52 million euro coupon until mid-December. If they agree, the company may avoid insolvency under Italian laws, a source close to the matter told IFR.

It is not clear whether the default will trigger a payment under credit default swap contracts.

Seat was bought in 2003 by private equity firms in a 5.7 billion euro leveraged buyout. CVC, Permira and Investitori Associati now hold about 49.5 percent of Seat, whose market value has fallen 99 percent since its all-time 2007 peak.

Permira and Investitori Associati have agreed to swap the portion of the Lighthouse bond into 90 percent of Seat's share capital. CVC, which holds 29.4 percent of Seat, has failed to support the proposal.

The worsening of a global credit crisis and its escalation to the heart of the euro zone in 2011 made refinancing hard, especially for highly indebted companies like Seat.

In the first nine months this year, Seat generated a free cash flow of 291 million euros, of which more than half was wiped out by interest payments and another fifth by cash taxes.

Such a financial burden has made it harder for Seat to respond to an advertising slump and soaring Internet competition.

Seat shares were suspended for excessive losses on Wednesday after falling more than 16 percent to 0.0310 euros, which gives the group a market capitalisation of 68 million euros.

The Lighthouse bond was last bid at 15 percent of its face value.