The company, formerly know as Yell, said its debt would be exchanged by lenders for all of the equity in a new group holding company.

The deal is subject to the approval of lenders holding 75 percent of the debt, the company said. The co-ordinating committee, which reached the agreement with Hibu, represents 32.8 percent of Hibu's debt.

Hibu built its debt pile through a series of ambitious acquisitions, including a 3.3 billion euro ($4.34 billion) deal to buy a Spanish directories business in 2006.

The company has also been struggling with a relentless fall in sales as digital revenue has not grown fast enough to offset a sharp decline in print revenue.

Hibu CEO Mike Pocock said on Thursday benefits of the restructuring would include "a reduction in debt and cash interest and an extension of debt maturities."

Thomson Reuters LPC reported last month that the company was discussing a plan with a senior steering committee, which included Soros Fund Management, Blackstone's credit fund GSO and Deutsche Bank, involving a debt-for-equity swap.

Hibu, which had delayed announcing its full-year results pending a decision on its debt, reported on Thursday an after-tax loss of 1.81 billion pounds. Sales fell 16 percent to 1.35 billion pounds.

Trading in Hibu shares were suspended as the deal with creditors would result in the stock being delisted.

Hibu shares, which traded as high as 604.69 pence in 2007, have fallen 75 percent since the company approached lenders for waivers in September. They last traded at 0.17 pence on the London Stock Exchange on Wednesday.

While shares plunged, the company's debt was actively being traded in the secondary market. Thomson Reuters LPC reported that Hibu's term loan A had risen from 17.44 pence in the pound on March 1 to 23.24 on Wednesday, as funds tried to buy into what they could of the debt ahead of a restructuring announcement.

(Reporting by Roshni Menon in Bangalore; Editing by Saumyadeb Chakrabarty)