Cordiant Communications, the embattled advertising group jumped 21.7% to 7p after the weekend newspaper reports that it was set to announce the disposal of its Public Relations group Financial Dynamics, and its Australian business, George Patterson Bates, in a move which will raise 50m for the company.

According to the Independent on Sunday, Cordiant has been negotiating with the management of Financial Dynamics for at least three months about a buy-out, and it is understood an agreement has been reached to sell the group for 25 m. George Patterson Bates, meanwhile, is being bought by venture capital group Pacific Equity Partners for 25.4m, though Cordiant will retain a 20% stake, the paper said.

Private investors back Cordiant purge

Chris Tryhorn
Friday June 6, 2003

Private investors in advertising group Cordiant are rallying round corporate raider Active Value by declaring their support on internet bulletin boards.

An email from one investor to Active Value's Julian Treger suggested small shareholders should back the resolutions Active has put before Cordiant, which include a complete purge of the boardroom.

The investor told Active its demand for an extraordinary general meeting of the crisis-hit advertising company was welcomed by investors as "a positive move".

"I am aware of many private investors that would offer their support to you in this matter," the investor wrote.

"Individually they are obviously 'a tiny whisper' but if collectively represented through a 'champion' the voice could be loud and clear.

"Therefore, would it be possible/helpful for Active to receive the proxy vote of private investors such as [sic] to boost their overall representation at the forthcoming meeting."

The bulletin boards of internet brokers would be the ideal place to contact "shareholders of a few hundred to many hundreds of thousands of ordinary shares", he added. "A standard pledge of proxy could be easily promulgated."

The email suggested Active could rely on a well-organised army of private investors in its fight to wrest control of Cordiant from its board before it can sell the company.

Cordiant has said its directors, lenders and clients would favour a takeover by an "industry partner" such as French group Publicis or Sir Martin Sorrell's WPP, which is conducting "due diligence" on the company.

Active Value, which is Cordiant's leading shareholder with 14.1% of the company, fears investors will be short-changed by a takeover or left with virtually nothing if Cordiant embarks on a debt-for-equity swap.

Active has released letters its lawyers obtained from Cordiant that have blown the lid on bonus payments to be made to Cordiant executives in the event of a takeover.

It said it believed the documents "clearly indicate that the directors are incentivised to sell the business to a third party rather than seek to restore trading at Cordiant".

Active wants to install an as-yet-unnamed chief executive, with Richard Wheatly, the former chief executive of Jazz FM, appointed executive chairman and Stephen Davidson, the West LB vice-chairman, made Cordiant's new finance director.

Disenchantment with chief executive David Hearn's track record at Cordiant has made some investors back Active's audacious strategy, pinning their hopes on an independent Cordiant being able to trade its way out of trouble.

"There are potentially many small shareholders in Cordiant Communications who are concerned about the recent board and management decisions emanating from Cordiant," the private investor wrote in the email to Mr Treger.

Cordiant, which is labouring under more than 200m of debt, is nearing the endgame in a dramatic struggle to rescue its business before the July 15 bankers' deadline

Big press rumours over the weekend of counter bidders but will it be above 3p?