NEW YORK Troubled Cordiant Communications Group has reached an agreement to sell a 70 percent stake in most of its Australian operations, including George Patterson Bates, for about $40 million, the British holding company said.
The deal, subject to shareholder approval, calls for private equity firm Pacific Equity Partners to take a 55 percent stake and the management of the Australian
operations to take a 15 percent holding. CCG will retain 30 percent ownership.
The transaction represents the first sale in a non-core disposal program CCG instituted earlier this year. The holding company, which is also looking to unload German ad network Scholz & Friends and is nearing a management buyout deal with public relations company FD International, will use the cash proceeds to pay down its estimated $300 million net debt, CCG said. Prior to completion, CCG said it will also extract surplus cash of $27 million to reduce net borrowings.
With about 900 staffers in Sydney, Melbourne, Brisbane and Auckland, the Australian operations generated nearly $85 million in revenue last year and $3.4 million in profit before taxes.
The Campaign Palace, which has always operated independently of George Patterson Bates, is not included in the transaction and will remain part of
CCG. But, the holding company said it plans to sell its interest in Western Australia-based agency Marketforce to its management.
Separately, CCG said it continues to talk to suitors about sales of its main assets, including Bates and 141 Worldwide, but reiterated that none of the
proposals currently under consideration is likely to result in an offer at or near the current share price. CCG has not identified those suitors. CCG stock at press time on Thursday was trading at about 55 cents per share on the London Stock Exchange.