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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The staff of Italy’s leading directory publisher, Seat Pagine Gialle, is in a state of shock following the sudden death last week of its popular CEO, who is credited with saving the company from collapse.

Alberto Cappellini died March 25 from an apparent heart attack, soon after completing a financial restructuring that may have saved the company.

The company has posted a message on its website headlined “Ciao Alberto” that read, in part:

“You have left us a vision, a great mission and, above all, an example of dedication that we will always carry with us and that will be an immense help in achieving the goals we have set together with you — no ifs, ands or buts.

“It is impossible to convey the void you have left behind, but also the gratitude we feel for what you have done for all of us. The best tribute we can give you and those you love is our daily commitment to continue your mission and your work.”

Cappellini, 52, joined Seat as CEO in April 2009, replacing Luca Majocchi, who left the company in February. Cappellini arrived at Seat following a long career with paper goods maker Kimberly-Clark.

Since taking over, Cappellini has focused on developing a cohesive strategy and fixing the company’s serious balance sheet problems. At the end of 2011, Seat was carrying more than 2.7 billion euros in net debt, a ratio of 5.6 times EBITDA (based on 2010 full-year EBITDA). In March, the company gained the consent of its lenders for a restructuring package that would convert some bondholder debt to equity.

Last year, investors fled the company, fearing it would crumble under the weight of its debt. At the beginning of 2009, Seat’s shares were trading at 11.62 euros. At the end of 2011, the stock had fallen to 0.2 euros, near oblivion. Last week, shares closed at 0.5 euros. While the share price plummeted under Cappellini, he is widely credited with putting Seat on a more sustainable course and negotiating a difficult restructuring that will ease the debt burden and ensure its survival, at least in the near to mid term.

Seat has not yet reported its 2011 full-year results. Through September 2011, the company saw its group revenues decline by 10.5 percent to 695.6 million euros.

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Thomsonlocal.com, the U.K. local print and online directories company owned by Italy’s Seat PG, has changed CEOs. Effective April 1, Elio Schiavo will move over to run Seat’s Telegate (directory assistance) operation full time. Schiavo has recently been dividing his time between Telegate and Thomson.

His replacement is veteran Seat executive Paolo Giuri, currently CEO of Europages, a B2B search operation under the Seat umbrella. Schiavo will remain chairman of Thomson Directories Ltd.

Giuri has a challenging task ahead guiding Thomson through a difficult transformation to a multi-product local print and digital SMB marketing company, competing with everyone from U.K. directories leader Yell to online only players like ReachLocal.

Thomson has a strong brand in the U.K. and a history of being creative in its approach to products and partnering. Some recent moves include a deal with CBS Outdoor to sell remnant bus advertising space and an agreement with Samsung to be included in its smart TV app store.

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