Cordiant Acknowledges Asset Sales, Looks to Focus on Bates

NEW YORK Cordiant Communications Group confirmed Thursday that it is looking to offload non-core assets, including Financial Dynamics International and its 77-percent stake in Scholz & Friends, in order to focus on the Bates Group.

The announcement comes two weeks after the British holding company said it was exploring a sale of majority stake in its Australian operations, including George Patterson Bates. CCG also said that will consider exercising its option to sell its 25-percent stake in the Zenith Optimedia Group in January 2004.

CCG said it is taking these steps to strengthen its balance sheet, which will appease its principal lenders. Early last year, after suffering an earnings collapse in 2001, the holding company renegotiated its banking covenants. To reflect the planned disposal program and continued adverse market conditions, CCG said it has started to renegotiate some of its financial covenants again.

The beleaguered holding company also reported Thursday that it expects 2002 revenues to be down 11 percent to $860 million, due to the difficult marketing conditions and key account losses in the U.S., namely Wendy’s and Hyundai. Operating profits for 2002, before exceptional items and goodwill amortization, are projected to be $60 million.

By selling off the peripheral businesses, CCG aims to enhance the operations of its core business, Bates Group, which represents 85 percent of its revenue. CCG formed Bates Group last September when it combined Bates, marketing services network 141, branding and design group Fitch and specialist network Healthworld to create an integrated communications offering.

The restructuring achieved an annual cost savings of $73 million, exceeding the initial estimate of $44 million.

“Market conditions remain depressed and we see little prospect of revenue growth this year,” said David Hearn, chief executive of CCG. “We’ve aggressively driven down costs … and are now focusing the group on its core strengths. This will also rebuild our balance sheet. We are creating a leaner, stronger group better placed to win revenue in the future.”