CORDIANT CONTINUES TO SHED UNITS

Sells Scholz & Friends for $25 Million as WPP Prepares Bid

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LONDON (AdAge.com) -- Troubled Cordiant Communications Group is continuing to shed assets while awaiting a
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possible bid from U.K.-based ad agency holding company WPP Group.

Cordiant sold its German operation, Scholz & Friends, for $25.28 million to the agency's management team and venture capitalists Electra European Fund. The German agency's new owners will take on a 77.3% interest in Scholz, and may have to pay a further $1.6 million in March 2004, depending on the agency's performance in the current financial year. In the year ended Dec. 31, 2002, Scholz made a pre-tax profit of $3.2 million from revenues of $70 million.

Reducing debt load
Cordiant will use all funds raised by the sale to repay some of its $400 million debt. Cordiant's debt reduction began with the sale of Australian agency George Patterson Bates on May 29, for $40 million. The sale of public relations firm Financial Dynamics, also for around $40 million, is expected imminently.

In the meantime, WPP has emerged as the front runner to buy the ailing Cordiant group. WPP is expected to put in a $160 million bid, offering Cordiant shareholders close to 3 pence (4.86 cents) per share, provided it can persuade Cordiant's banks to write off some of its debts.

If WPP's chief executive, Martin Sorrell, is successful in his bid, the group is expected to take on $144 million of Cordiant's debt, with the remainder to be found through disposals or written off by the banks.

Other bidders lose ground
WPP's rivals for Cordiant --­ Publicis Groupe and a consortium of German bank WestLB with U.K. buyout specialist Active Value ­-- both appear to be losing ground.

Cordiant stated on June 6 that its big advertising clients would prefer to see the company bought out by another player in the industry, weakening the consortium's prospects. Publicis seems to have cooled off, and its proposal of putting Cordiant into administration was unpopular with Cordiant's management.

WPP refused to comment on its bid, but last week confirmed that it is conducting detailed due diligence to determine whether it should make an offer for Cordiant.

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