Lenders have taken control of Yellow Pages owner Hibu in a restructuring deal that will leave nothing for shareholders but aims to save jobs.
The deal cuts £800m of the company's £2.3bn debts, which were largely run up via foreign acquisitions during the last decade's credit bubble.
The phone books and digital services firm, which rebranded itself from Yell last year, has 12,000 employees.
Lenders will take ownership of the firm and slow the repayment of its debts.
The creditors include George Soros' hedge fund, US private equity group Blackstone and the major European investment bank Deutsche Bank.
The deal has been given the nod by a co-ordination group of lenders representing just under 40% of the company's debts, but still needs formal approval from at least 75% of creditors.
It is expected to be completed by the end of the year.
Hibu's fall from grace came after it expanded too rapidly during the last decade - including the 3.3bn-euro purchase of a Spanish directories business in 2006 - only to see its business model of listing local small businesses undermined by more generic online search engines such as Google.
"This has been a very demanding year for the group, with some difficult and painful decisions made," said chairman Bob Wigley.
Chief executive Mike Pocock took a more optimistic stance: "The proposed restructuring will allow Hibu to focus on consolidating its leading position in the provision of marketing solutions to our one million [small and medium-sized enterprise] customers."
The company's results, also published on Thursday, recorded a £2bn loss, largely due to the one-time cost of writing off many of its previous acquisitions.
The company saw a 27% drop in revenues at its Yellow Pages business to £163m in the year to 31 March compared with a year earlier.
However, revenues at its digital services unit rose by a third to £174m.
Source: BBC News - Business http://www.bbc.co.uk/news/business-23448033#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
