Shareholders in Yell, the owner of Yellow Pages, have called for decisive action from the group's management, amid concerns over its falling share price and high levels of debt.

Yell's shares have fallen by 80 per cent over the past year and its market capitalisation has dropped to £757 million, far lower than its £3.8 billion debt level.

Richard Marwood, a fund manager at Axa Investment Managers, said: “Yell's management needs to take decisive action, as the odds of the group staying safe is small ... A slowing economy is not good for Yell. They may have to look at a debt-for- equity swap, as they are probably too late for a rights issue.”

Another institutional shareholder said: “It looks challenging for Yell at the moment and they will need to do something. The market does not want such levels of gearing at the moment.”

However, John Davis, Yell's chief financial officer, said that he would not be panicked into financial restructuring or asset disposals and he ruled out taking such steps.

“We are comfortably supporting our level of debt and a rights issue, asset disposals or debt-for-equity swap is not needed,” Mr Davis said.

Mr Davis said that the group had the full backing of its leading shareholders, which include Invesco, with a stake of about 17 per cent, and was not close to breaching its banking covenants. Invesco refused to comment.

“Our cashflow is strong and we are comfortably making debt repayments from our cashflow,” Mr Davis said. “We may not be recession-proof, but we do have resilience ... The way to prove wrong any negative comments about Yell is to deliver. We believe our shareholders are fully behind us.”

Analysts have raised concerns that that a rights issue could be too late and a more dramatic option may be required, such as asset disposals or a debt-for-equity swap.

One analyst, who preferred not to be named, said that a rights issue would raise only about £350 million at present, a fraction of the group's debt. “If they tried a rights issue three or four months ago, they could have raised nearer £1 billion ... A debt-for-equity swap should be the absolute last resort,” he said.

Usman Ghazi, an analyst for Dresdner Kleinwort, said that Yell's management was “caught between a rock and a hard place”.

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