Cordiant eyes equity swap as bid hopes fade

Cordiant Communications yesterday warned investors not to expect circling predators to table a bid at the current share price as it hinted at the possibility of a debt-for-equity swap.

Cordiant Communications yesterday warned investors not to expect circling predators to table a bid at the current share price as it hinted at the possibility of a debt-for-equity swap.

Shares in the troubled advertising group dived 11 per cent to 8.5p, valuing it at £35m. They have collapsed by more than 90 per cent this year.

Cordiant, which was plunged into its current crisis after Allied Domecq, a key client, pulled its account last month, said recapitalisation – swapping debt for equity or launching a rescue rights issue – was among the options it was considering. The others include "possible offers" from bidders including Publicis of France.

Analysts said the likelihood of a debt-for-equity swap, which would wipe out most ordinary shareholders' investments, had increased after it emerged that the New York-based Cerberus Capital Management is understood to have bought as much as half of Cordiant's debt.

Cordiant said that since receiving "very preliminary" takeover proposals last month it had been evaluating more detailed proposals, including "possible offers for the company or involving its recapitalisation". It added: "None of the proposals currently under consideration is likely to result in an offer at the current share price."