Shares in Cordiant Communications were suspended on the London Stock Exchange this morning pending clarification of the advertising group’s tenuous financial situation.
The latest development comes after a weekend of intricate negotiations as Cordiant sought to secure a buyer. A takeover appears to be the only way the company can be saved following a number of key account losses and the accumulation of huge debts in the recent past.
It had appeared that WPP was in the best position to assume control of Cordiant and it is believed to have offered to settle 91% of the firm’s liabilities.
However, it has now been outgunned by Publicis which is reportedly willing to saddle 93% of Cordiant’s debts. The French advertising giant has strengthened its hand by agreeing an exclusive deal to buy up a proportion of the debt from US hedge fund Cerberus Capital Management.
The two companies plan to put Cordiant into temporary administration and share the assets between them Approximately £10 million would then be divided up amongst shareholders.
Cordiant is estimated to be around £250 million in debt and despite a number of recent disposals, does not have enough working capital to last for the next 12 months.
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