Chime secures bank deal after £42m loss

Lord Bell's Chime Communications has pulled off a refinancing deal with its bank but a "very poor year" led the PR and marketing group to a £42m loss.

The company, which breached its banking covenants at the end of last year has gained agreement for a new £37m facility from Royal Bank of Scotland. This includes a £17m tranche of "mezzanine" funding and if RBS provides this, the bank would end up with a 5 per cent stake in Chime. The company is passing on its final dividend because of "insufficient reserves".

Lord Bell, chairman, said: "After eight very successful years we have had a very poor year with operating profits down by 50 per cent. Our market has been in reverse for 18 months and the effect has been very marked.

"However I am pleased we have reached a good new agreement with our bank. The market seems to have bottomed out. We must now wait for a return to growth and meanwhile strive to increase our market share."

The company, which includes the City PR group Bell Pottinger, said revenues had contracted and it had lost clients last year. It took exceptional costs of £12.6m to cover redundancies, a reduction in office space and a review of its banking arrangements. Goodwill amortisation and impairment resulted in a further £36m hit, giving a loss of £41.6m for the last calendar year – compared with a £9.1m profit in 2001. Operating profit halved to £8.4m.

Chime said its PR, advertising and marketing services had all suffered last year as clients reduced costs. Group turnover dropped from £95.1m in 2001 to £70.4m last year. Only research work held up. Chime reduced its cost base by 20 per cent to £62m.