WPP prefs 'are worth 100m pounds in receivership'

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FIDELITY, the Boston-based investment management group, is said to have told fellow WPP shareholders that it has calculated about pounds 100m would be left over for preference shareholders if the advertising giant fell into receivership.

WPP has a total of about dollars 1.5bn ( pounds 779m) of debt. It will be put in the hands of receivers if shareholders vote down dollars 1bn refinancing proposals next Wednesday.

Larry Domash, Fidelity's director of high yield research, is said to have told investors of the calculation at a series of meetings in London. He was trying to drum up support for his efforts to force the banks to give preference shareholders better terms in the restructuring.

Fidelity believes that the banks, which will get 52 per cent of WPP's equity under the terms of the refinancing, should take less. It has suggested that a warrant issue be made to preference shareholders.

WPP needs 75 per cent of its shareholders to back the refinancing proposals next week to avoid receivership.

The banks have spent the past few days discussing the details of a plan to place WPP's existing holding company in receivership, but then sell the operating companies to a new holding company should the refinancing proposals be voted down.

Fidelity has bought five million shares in the past fortnight, lifting its holding in the preference shares from 8.6 to 10.9 per cent.

It is one of a group of investors who have regularly discussed the refinancing and between them hold between 30 and 40 per cent of the equity.

Fidelity has not committed itself to voting against the proposals, but said it was prepared to. The only investor to have publicly said it would vote 'no' is Klingenstein, Fields & Co, a US investor with about 4.5 per cent.

WPP's ordinary shares rose 6p to 40p yesterday and the preference shares rose 3p to 29.5p.