Cordiant Seeks Swift Sale

NEW YORK Cordiant Communica-
tions Group seeks to conclude talks about its sale or recapitalization “in the very near future” and “expects to write to shareholders on this matter shortly,” according to a statement issued on Thursday by CCG’s board.

Earlier this week, WPP Group emerged as a frontrunner in the race to acquire the troubled British holding company.

Sources said WPP chief executive Sir Martin Sorrell was preparing a bid that would give equity holders 3 pence a share and require debt holders to write off some of CCG’s estimated $440 million in gross debt [Adweek Online, June 9]. Publicis Groupe and Cerberus Capital Management in partnership with Grey Global Group have also carried out due diligence regarding a bid for CCG, sources said.

CCG, which put itself on the block after losing Allied Domecq last month, reiterated that its major clients have “indicated their preference for Cordiant to seek an industry partner.”

However, 14.1-percent shareholder Active Value, a proponent of a recapitalization plan, remains a vocal dissident of a sale. The London fund, which called for an extraordinary general meeting last week, wants to unseat current management and is willing to put up half of a proposed $50 million equity injection.

Also, today, CCG scheduled an extraordinary general meeting for June 28 for shareholders to approve the sales of German ad network Scholz & Friends and a majority stake in its Australian operations. CCG hasn’t yet set a date for Active Value’s requested meeting.

While the disposals of the Aussie assets and Scholz will help reduce CCG’s debt, the company said “in the opinion of the directors, the group does not have the sufficient working capital for at least 12 months” from today. CCG said as of April 30, its gross debt balance was about $440 million, cash was $100 million and net debt $335 million.

“However, the company continues to enjoy the support of its lenders, has resources to meet its current obligations and is actively taking steps to address the longer term working capital position, including constructively working with its lenders to secure long-term funding, execution of the disposal program and consideration of a possible sale or recapitalization of Cordiant,” CCG said in the statement.

CCG’s shares closed on the London Stock Exchange today at 5.25 pence, up 5 percent.