Struggling Cordiant facing loans crisis

ADVERTISING giant

The top broker's note recommends selling Cordiant shares, a further blow to the company, whose share price fell almost 12% last week to 93 1/2p, leaving the company valued at £372 million.

The world's ninth largest advertising company is due to meet its bankers in January to renegotiate mounting debts estimated at £167 million, compared with a £2.4 million cash balance at the start of the year.

Cordiant's debt is a legacy of its spending spree in recent years, in particular a £237 million takeover last year of design and branding business Lighthouse.

In September, Cordiant admitted its covenants were being 'tested' but the suggestion they may have been breached will increase pressure on chief executive Michael Bungey to secure a refinancing. Cordiant's shares slumped from 293 1/2p in January to 54 1/2p in October.

Although shares have staged a recovery, it has been tempered by news that Cordiant's Bates Worldwide advertising network had been asked to pitch again for the £107 million Hyundai car account in the US. It retains the account for the rest of the world.

'The possible loss of the account highlights the fact that Cordiant is having a difficult year,' said an analyst.