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The firm that publishes Italy's Yellow Pages declared insolvency on Tuesday due to a slump in advertising, saying it could not honour 200 million euros ($271 million) in financial commitments this year.
The telephone directory company, Seat, said in a statement after a board meeting that it could only generate cash flow of around 50 million euros to service its debt and had available liquidity of some 100 million euros.
"The financial resources available are not sufficient to discharge the obligations due in 2013 under the current debt structure," it said.
"The companies will apply for the composition with creditors procedure," it added.
The company said it had been hit by economic conditions in Italy and a sharp drop in advertising but remained committed to surviving the slump.
The announcement triggered a 40-percent crash in the company's share price in morning trading. In afternoon trading, the share price was down 26.67 percent at 0.0011 euros.