Cordiant, the communications to advertising group that is selling some of its key assets to reduce its £220m debts, may have to take a write-off of up to £25m on any sale of Financial Dynamics, its financial public relations consultancy.
According to sources close to the disposal negotiations, the sales memoranda for Financial Dynamics makes grim reading in relation to the public relations agency's current performance.
The agency's profits are down to about £5m from a peak of about £10m three years ago. The figures going forward, however, look even more uncertain with the UK business having just lost a number of key clients, including Reuters and Emap (both to Brunswick) and Kingfisher.
Financial Dynamics's management team, led by Charles Watson and Tony Knox, is said to have put a bid in of £20m – a figure well short of the £28m that is considered as a reasonable price by Cordiant's financial advisers, UBS Warburg.
The group was originally acquired by Cordiant as part of its purchase of the Lighthouse Group, when it achieved a price of about £100m.
Given the low-ball figure submitted by the management team, industry sources believe there is room for private equity groups to put in counter offers.
CinVen, which is a Financial Dynamics client, is believed to have shown an interest in the sales information being issued by UBS Warburg.
WPP, Sir Martin Sorrell's advertising group, which already owns the Finsbury and Buchanan financial public relations agencies in the UK, has been rumoured to be interested in buying Financial Dynamics – but is now no longer in the hunt.
Cordiant has put Financial Dynamics in its books at £45m – so a sale price of £20m would lead to a £25m write-off.
Cordiant is also trying to sell Scholtz and Friends, the German advertising company; its Australian advertising group George Patterson Bates and its 25 per cent shareholding in Zenith Optimedia.
Cordiant says that it is keen to hang on to Bates Worldwide, the group's advertising network – but a number of key accounts there, such as SkyPlus and Woolworths are up for review.
Numis Securities has estimated that the Cordiant disposals could raise as much as £150m – but that figure may now be viewed by some as rather optimistic.
Sources said the sale of the Australian-based George Patterson Bates might not realise as much as expected because the agency had recently lost some top senior executives and three of its top accounts were currently under review.
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