Cordiant stakes its future on a £50m double sell-off

Click to follow
The Independent Online

Cordiant, the troubled advertising group, is ready to announce two vital disposals, the £25m sale of its financial PR business Financial Dynamics and a A$63m (£25.4m) deal for its Australian business, George Patterson Bates.

The two sales are crucial to the survival of the group, which is fighting for its life after breaching covenants on its £220m of debts. Its banks have given it until the middle of July to come up with a rescue deal, but the situation has been complicated by the emergence of US hedge fund Cerberus, which has bought up to half the debt in the secondary market.

Cordiant has been negotiating with the management of Financial Dynamics for at least three months about a buyout. It is understood that an agreement has been reached to sell the operation to a team backed by venture capital group Advent International for £25m.

This will be the sixth time Financial Dynamics has changed hands in 16 years, including two management buy-outs. The last time the management bought the agency they then sold it to Lighthouse, a US group, for £50m. Lighthouse was purchased by Cordiant for $421m (£260m) in a deal which has been largely responsible for Cordiant's troubles after it wrote off £200m on the sale.

George Patterson Bates is being purchased by venture capital firm Pacific Equity Partners, though Cordiant will retain a 20 per cent stake.

Cordiant is still in talks with Publicis, the majority shareholder in Zenith, about selling its 25 per cent stake in Zenith. The holding was valued at £75m but Publicis hopes Cordiant's troubles will secure a substantial discount.