NEW YORK Active Value, the shareholder fund that owns 14.1 percent of struggling British holding company Cordiant Comm-
unications Group, said it seeks to oust top management after it was revealed that some senior executives recently renegotiated their employment contracts for big payoffs if they sell the company.
"We have a great concern that shareholder concerns are not being taken into consideration," said Brian Myerson, who runs London-based Active Value with Julian Treger.
Yesterday, Active Value called for an extraordinary general meeting amid concerns that a sale could leave shareholders empty handed. Myerson said CCG must set a date for the meeting within the next three weeks but has not indicated yet when it plans to do so.
Active Value is proposing resolutions that include the removal of CCG chief executive David Hearn, finance director Andy Boland and chairman Nigel Stapleton. To replace that team, Active Value wants to bring in Richard Wheatley, a former Leo Burnett executive in London and former CEO of London radio chain Jazz FM, who would become executive chairman; and Stephen Davidson, vice chairman of WestLB bank, to become finance director.
The fund has selected a new CEO, but Myerson wouldn't disclose details other than to say it's someone from the ad industry. If Active Value's proposal is passed, CCG would receive $48.9 million through a capital infusion, half of which Active Value would provide, with the rest coming from other shareholders.
In a statement, CCG acknowledged receipt of Active Value's request for an extraordinary general meeting. "Active Value made known its support for a proposal from WestLB regarding the appointment of a new management team and a possible equity injection," the company said in the statement. "The board has cooperated with West LB and continues to furnish them with information to enable them to rework their proposal."
The company said that its lenders have been supportive of the board's twin-tracked strategy: to carry out an orderly disposal of a number of non-core assets and to evaluate a range of strategic options concerning the remaining assets, including Bates and 141 Worldwide. Last week, CCG completed its first non-core asset sale of a majority stake in its Australian operations, and is close to completing the disposals of German ad network Scholz & Friends and public relations firm Financial Dynamics.
CCG also said it continues to advance its discussions with various parties, seeking to "bring them to a conclusion in the very near future in the best interests of the stakeholders of the Group and its clients." WPP Groupe, Publicis Groupe and Cerberus Capital Management in partnership with Grey Global Group are carrying out due diligence regarding a bid for the troubled holding company, sources said [Adweek Online, June 2]. It added that its major clients have "indicated their clear preference for the Group to seek an industry partner."
Hearn did not immediately return calls, nor did a CCG representative.
Another Active Value resolution blocks the sale of CCG "at or near the current price" of 8.20 pemce on the London Stock Exchange. The company's U.S. ADR's are currently trading at 57 cents on the New York Stock Exchange.
This story updates a previously posted item.