Cordiant Looks For Survival Plan
Cordiant Communications this morning said that it is still in negotiations to reach a plan that will secure its future, following the devastating news of a key account loss a couple of weeks ago.
Following this news, shares in Cordiant plummeted, slashing its market capitalisation from £113 million to just £40 million overnight (see Potential Buyers Circle Crisis-Ridden Cordiant). At one point in the last few days Cordiant’s shares were trading at a level which valued the group at only £20 million. This made the group a much more attractive proposition to would-be buyers.
The crisis prompted Cordiant’s financial advisors, UBS Warburg, to issue potential suitors with an information pack on the business. After receiving some preliminary takeover approaches, Cordiant says it is now evaluating a range of more detailed proposals, including possible takeover offers or a recapitalisation. It is thought that one of the predators is French advertising giant Publicis.
A recapitalisation procedure could see Cordiant’s lenders receive shares in the group in a debt-for-equity swap similar to that undertaken by UK cable operator, Telewest Communications. As regards a takeover, Cordiant says that none of the proposals currently being considered is likely to lead to an offer at the current share price.
Whatever Cordiant’s next move, it has bought itself a little time in which to formulate a plan, as funding has been secured through to July this year (see Cordiant Shares Bounce Back As Short-Term Funding Is Agreed). Until then, it is to continue the disposal programme which is already at an advanced stage with some of the company’s assets.
However, newspaper reports over the weekend claim that the group will be seized by its bankers if an agreement with Publicis cannot be agreed. A second bid is said to have been received from a ‘mystery venture capitalist’.
Shares in Cordiant Communications were down by 1.75p at 7.75p by mid-morning today. This gives the group a market value of £32.2 million.
