Controversy as WPP pulls off rescue

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Tortuous attempts to refinance WPP, Martin Sorrell's beleaguered advertising group, looked likely to succeed this weekend after an important holder of preference shares unexpectedly decided to reverse its position and vote in favour of the proposals.

Fidelity, the Boston-based fund management group, said yesterday that it had reluctantly decided to accept the terms of the refinancing.

Anthony Bolton, one of Fidelity's London-based fund managers, explained that a conference call had been held with other preference holders on Friday, at which it had become apparent that there was hardly any support for continued attempts to extract better terms.

Bankers have been warning preference holders that the company would be put into administration, leaving shareholders and other creditors out in the cold, if they continued to hold out for more attractive terms.

WPP shares rose 6p to 40p in late dealings on Friday afternoon, as Wall Street apparently learned of Fidelity's sudden about-face.

While Fidelity's action will secure WPP's future, a row is brewing over the fund management company's conduct in the refinancing process. Another preference holder accused Fidelity of being duplicitous.

'During that conference call on Friday, they certainly didn't say they were going to vote in favour,' the preference holder said. 'It's simply not true for them to say there was no support for carrying on with the fight.'

Fidelity is also being criticised for having been a strong buyer of WPP ordinary shares as the price was being driven down by its own threats to vote against the refinancing proposals. With success now guaranteed, the ordinary shares are likely to bounce.

'Either they knew all along that they were going to vote in favour of the proposals or they were nobbled,' the preference shareholder said. But Fidelity insisted that its decisions to buy ordinary shares and vote in favour of the proposals were unconnected and perfectly legal.

Bankers are swapping some dollars 270m ( pounds 140m) of their dollars 1.2bn of WPP debt into equity under the proposals.