The publisher of Yellow Pages is set to be taken over by a syndicate of banks under plans to tackle its £2.2 billion debts, it has been reported.
Hibu, which is the new name for directories firm Yell, has been unable to shake off the legacy of a costly expansion drive that saw it snap up its biggest rivals in Spain, America and parts of Latin America.
According to the Sunday Times, more than 400 banks and bond investors have started work on a financial restructuring that will see a large chunk of the debts wiped out in return for control being handed to lenders.
Creditors including Royal Bank of Scotland, Goldman Sachs and Deutsche Bank are reportedly in talks to appoint American restructuring firm Houlihan Lokey about preparing a blueprint for the debt-for-equity swap.
Shareholders, who have seen the stock slide from 600p five years ago to just under 1p on Friday, are likely to be wiped out under the move.
The group, which employs around 13,000 people, has attempted to reinvent itself by increasingly focusing on digital operations as it looks to offset the pressure on its printed directories operation.
It has rolled out eMarketplace, which provides small businesses with the infrastructure to sell online without having to set up their own website.
Hibu said on Friday that it had been successful in persuading lenders to waive debt covenant tests while it attempts to address its position.
The company has reduced its borrowings from £3 billion four years ago but interest charges on the debt have continued to eat into profits. And the company swung to a £1.4 billion loss last year due to a giant write-off on the value of its acquisitions.
The Press Association, photo by Trevor Coultart