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File photo of Marc Tellier, president and chief executive officer of Yellow Media.

© Christinne Muschi / Reuters/Reuters

Yellow Media is warning its shareholders that if they don't vote in favour of a controversial restructuring plan, the company will be forced to "immediately pursue other options less favourable to the company and its stakeholders."

The threat comes ahead of a Sept. 6 meeting in which common shareholders are being asked to approve a debt-for-equity swap that would see their holdings largely wiped out by a recapitalization plan that would leave debt holders holding about 80 per cent of the company's newly issued shares.

"Debtholders and shareholders are urged to give serious attention to the recapitalization. It is extremely important for Yellow Media's future that the recapitalization be approved and implemented without delay and the company recommends that debtholders and shareholders vote in favour of the recapitalization."

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The company said it needs to restructure because it is carrying too much debt at $2-billion and much of it is set to come due in the next year. Print revenue is falling quickly in the Yellow Pages it produces, and digital revenues aren't growing quickly enough to make up the difference.

But many shareholders – and even the country's largest banks who hold some of the debt – have voiced concerns that the company is still posting profits despite the difficulties and that any restructuring is premature.

The banks have asked a Quebec judge to postpone any restructuring until all of its debtholders have a better understanding of the challenges facing the company and its options. A ruling is expected Sept. 10.

Meanwhile, an activist shareholder has decided to rally holders of the company's preferred shares against the deal, in light of the Montreal-based company's $67.7-million profit in the last quarter (revenue however, came in 16.4 per cent lower than a year ago at $286.5-million).

Glen Bradford, who owns about 250,000 of the shares, hopes to have 5 per cent of the shareholders fill out a form (http://globalspeculation.wufoo.com/forms/yellow-media-shareholder-meeting/) that would force an emergency meeting with management ahead of the company's Sept. 6 meeting.

"The reason I'm doing this is because I've had over 50 people reach out to me and basically tell me to see what I can do about the situation and this is the first legal step," he said.

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