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Christian Paupe has resigned as CFO of Yellow Media.Christinne Muschi/The Globe and Mail

Yellow Media Inc. ousted its chief financial officer, Christian Paupe, a close associate of chief executive officer Marc Tellier and a key driver of the company's efforts to transform itself.

The shakeup at the executive level highlights the challenges that management is now facing as the company struggles to evolve from a legacy print directory business and compete in a digital world.

The announcement came a month after the company reported a loss in the second quarter, cut its dividend by 75 per cent and had its credit downgraded by two ratings agencies.

Mr. Paupe was asked to step down, the company said.

"Corporate strategies change and this decision is simply a reflection of our need to strengthen our corporate transformation," a spokesperson for Yellow Media said in a statement.

He will be replaced on an interim basis by Ginette Maillé, the company's chief accounting officer since 2003.

Yellow Media has been ramping up its efforts over the past year to cast itself as an online and mobile advertising company, offering more digital services to clients that have traditionally advertised in its printed books. Chief marketing officer Stéphane Marceau, who was brought on board to oversee that digital transformation, left the company in May.

Mr. Paupe and Mr. Tellier were not available for comment Tuesday, a company spokesperson said. Mr. Paupe was praised by many analysts over the years for his straightforward presentations and commitment to providing financial guidance (something the company announced in August it would stop doing). But management has been increasingly criticized by analysts for having a financial structure – and a debt load – that is out of step with the challenges facing it, and a transformation that is putting pressure on its earnings.

"When you look back at the last three years, it was increasingly becoming questionable, what capital structure Yellow had in place," said one analyst speaking on condition of anonymity.

During a conference call last month to go over the second-quarter results, Mr. Paupe spoke at length about the company's financial plans and how it would pay down $1-billion in debt by the end of next year. "So, we have a clear mind in terms of how we intend to execute the plan," he said at the time. "That will begin in earnest."

Yellow Media is faced with paying down a total debt of $2.4-billion, which was led to the $708-million sale of its Trader Corp. unit earlier this year, as well as the dividend cut which is expected to save the company roughly $260-million per year. Mr. Paupe presided over three cuts to the dividend paid to investors in just over two years.

Mr. Paupe joined Yellow Media in 2003, just months before the company, then called Yellow Pages, went public. Mr. Paupe was considered a good catch. He'd served in senior financial roles at several companies including Quebecor World, Southam Inc. and Bell Canada International. Fully bilingual, he had also been trained as an officer in the Canadian Forces.

By all accounts, Mr. Paupe and Mr. Tellier worked well together and quickly became Yellow Media's driving force. In 2006, they orchestrated the $2.55-billion purchase of Advertising Directory Solutions, a phone directory business in Western Canada, which was considered a coup and helped to cement the company's dominance over the directories market in Canada.

Mr. Paupe, 53, had been so key to Yellow Media the company improved his pension plan last year as an incentive to keep him until at least 2015.

Since that time, however, pressures have continued to rise for Yellow Media. The company's stock has taken a dive this year, reaching all-time lows and declining a total of 87 per cent since the start of the year. The shares are now trading at 79 cents, a stunning drop for a Canadian company that historically was a bulwark for many investment portfolios.

"We wish Mr. Paupe the best in his future endeavours and believe that Ms. Maillé is best placed to continue to help guide the company through its successful business transformation," Yellow Media said in a statement Tuesday.