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Seat Pagine Gialle, Italy’s leading directory publisher, has announced it is insolvent and unable to meet its debt obligations. Specifically, the company was not able to meet its 2013 debt obligations totaling 200 million euros.

Seat will now seek protections from Italian courts while it tries to restructure its debt. The company went through a debt restructuring last year. At the end of 2011, the company had debts totaling 2.7 billion euros. The restructuring reduced the debt to 1.3 billion euros.

A slumping Italian economy, the rapid shift from print to digital, as well as the company’s debt, even after last year’s restructuring, have conspired to undermine Seat’s financial condition. At its peak in 2007, Seat’s revenue in Italy was 1.1 billion euros with a 51 percent EBITDA margin. In 2011, Italian revenues were 852 million with a 46 percent margin. The company has not yet reported its 2012 results, but we expect to see steep revenue declines.

Last March, Seat was rocked by the death of its popular CEO Alberto Cappellini, who died of a heart attack shortly after completing the last financial restructuring, which at the time was believed to have bought the company some breathing room to transform the business. Now the company is saying it will fall well short of its earlier 2011-13 financial projections.

In an announcement released earlier today, the company had this to say about its financial condition:

“Although the group has a substantial capacity of generating operating profits and cash flows, the financial debt burden is not sustainable, particularly in light of expected performance levels, and, in addition, prevents the undertaking of business development options.”

Seat noted in its announcement that the Italian economy contracted by 2.2 percent in 2012, and the overall ad market shrank by 14 percent. The economic situation is not expected to improve until the second half of this year, at the earliest.

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