* Says debt burden makes business targets unachievable
* Will not pay Jan 31 bond coupon, Feb 6 loan interest
* Shares drop close to zero, bond bid at 24 pct face value
* Restructuring could be debt-to-equity swap, loan haircut
By Danilo Masoni and Natalie Harrison
MILAN/LONDON, Feb 5 Italian directories company
Seat Pagine Gialle will ask creditors for a debt
restructuring after conceding that its interest burden and the
deepening recession have made its targets to 2015 unachievable.
Only five months ago the Turin-based company, which employs
more than 4,000 people, completed a lengthy debt restructuring,
apparently winning sufficient breathing space to continue to
operate and refocus its business for online competition.
"Targets set in occasion of the recent debt restructuring
are no longer current and achievable," it said in a statement on
Tuesday. "The level of indebtedness is not sustainable and
represents an obstacle for the industrial development of the
Italy's economy shrank by 2.2 percent in 2012 and
advertising sales - Seat PG's main source of income - plunged 14
percent, it said. Its previous plan was based on a GDP growth
forecast of 1 percent.
The company, led by CEO Vincenzo Santelia, said it will
apply for Italy's "concordato preventivo" process - similar to
Chapter 11 proceedings in the United States - to ensure Seat
PG's can continue operating.
Expectations that Seat PG would seek a second round of
restructuring emerged last week after the company's surprise
decision to suspend a senior bond coupon.
Like other directories firms, including France's PagesJaunes
and Yell in Britain, Seat PG has been struggling to
reduce debts and fight competition from Internet search giants
such as Google.
Seat PG was bought in 2003 by private equity firms in a 5.7
billion euro ($7.7 billion) leveraged buyout that burdened the
company with a mountain of debt that became increasingly
difficult to manage amid the global credit crisis.
The first restructuring reduced its debt to 1.34 billion
euros by the end of September, a level that many said remained
too high to ensure the 88-year-old company's survival.
The company said on Tuesday that it will not be able to meet
debt obligations for 2013 totalling 200 million euros, with
cashflow available for debt servicing seen at 50 million euros
and available liquidity estimated at 100 million euros.
It said that it will not pay the half-yearly senior bond
interest due on Jan. 31 and interest due on Feb. 6 on a senior
bank loan with Royal Bank of Scotland and Italian banks.
A court decision on how long the company has to present its
restructuring plan is expected in the next fortnight.
The court can give the company either 60 or 120 days to draw
up the plan, with a further extension of up to 60 days. There
will be no payments to creditors during this period.
The restructuring plan, which one analyst said could take
the form of another debt-to-equity swap or a haircut in bank
loans, requires approval by creditors.
Under last September's restructuring, holders of
subordinated bonds agreed to swap their holdings for an 88
percent stake in the company and 8 percent of the senior bonds.
The original senior bondholders were left untouched.
The deal gave Anchorage Capital Group a 17.6 percent stake
in Seat PG, making it the company's largest investor, followed
by Owl Creek Asset Management and Monarch Alternative Capital.
Shares in Seat PG fell by as much as 40 percent on Tuesday
to an intra-day record low of 0.0009 euros in morning trading.
Its bonds were bid at 24 percent of their face value, a trader