The troubled company issued a statement last night in response to moves by one of its major investors, Active Value, to call an extraordinary general meeting to vote on changing the management and shoring up its finances with a 拢30m-拢40m investment.
The plan flies in the face of Cordiant's current policy of disposing of non-core assets and then selling the remainder of the business to a rival holding company, with WPP Group and Publicis Groupe the main contenders. Cordiant said that its lenders have been supportive of this strategy, as have clients.
Shares in the company rose by 29% yesterday as news of Active Value's plan hit the media, to close at 7.75p, up from 6p the previous day.
In its statement, Cordiant said: "Management has also maintained a continuous dialogue with the group's major clients, who have indicated their clear preference for the group to seek an industry partner."
WPP has said it is considering a bid, with Publicis and Grey Global Group also thought to be interested in buying the company. Cordiant has already sold 70% of its Australian operations for 拢24.6m and said it is expecting to announce deals for Scholz & Friends and the PR network FD International shortly.
Active Value owns 14.1% of Cordiant, and is proposing that the current management, including chief executive David Hearn, be replaced with a team including Richard Wheatley, the former chief executive of Jazz FM and Stephen Davidson, former chief executive of Telewest.
In Cordiant's statement, it says that it maintained an open dialogue with all of its major shareholders, including Active Value. It said: "More recently, Active Value made known its support for a proposal from WestLB regarding the appointment of a new management team and a possible equity injection. The board has cooperated with WestLB and continues to furnish them with information to enable them to rework their proposal."
According to the Financial Times, Cordiant could hold the extraordinary general meeting as early as June 23, or up to a month after that. Its current banking agreement for 拢250m debt finishes on July 15.
The crisis at Cordiant has been triggered by several major account losses at its advertising network Bates Worldwide, including 拢18m in revenues from Allied Domecq work. The latest client to be reviewing its arrangements with the company is the retailer B&Q, which is reported to be concerned that should the company collapse, it will be left without an agency.
It is understood that any Cordiant sale could include an agreement for the buyer to take on the B&Q account.
If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the .