X-Rite is ploughing more than $175m (£94.16m) into its business to reduce its massive debts, mainly by more than doubling its number of shares and selling large stakes in the company.

The deal sees private equity firm One Equity Partners invest $100m in X-Rite shares, giving it a 37% stake in the group.

However, X-Rite's founders are also cashing in their life insurance policies to raise a further $20m, while an agreement with its other lenders has given the company access to another $10m on its revolving credit line (which was previously frozen while the company resolved its financial issues).

Thomas Vacchiano, X-Rite's chief executive, said: "I am pleased to announce a transaction that addresses X-Rite's capital structure that we believe balances the long-term interests of all our stakeholders.

"The combination of the right capital structure, with proven P&L and cashflow model, provides us the needed foundation to refocus 100% of our efforts and attention toward our customers and strategy to lead the transformation of the industry and the business of colour."

An additional $55m is being raised through the sale of stakes to two existing institutional shareholders. Sagard Capital Partners and Tinicum Capital Partners will increase their shares in X-Rite to 15.4% and 13.4% respectively.

The move will enable X-Rite to reduce its debt from $411m to $267m on completion of the transaction, when its number of common shares will grow from 29.6m to 76.5m, subject to shareholder approval.

X-Rite made a loss of $20.9m in the second quarter. Last year, the company borrowed money to buy Pantone and it acquired rival Amazys in 2006.