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PARIS-Caught between the pincers of crippling debt maintenance and recession-dampened revenues, French network BDDP is close to completing a debt-for-equity swap with its bankers in hopes of gaining some financial breathing room and remaining independent.

The restructuring, according to agency insiders, will take place before April 1, a deadline set by the banks for BDDP to relieve its financial stress. BDDP President Jean-Claude Boulet declined to confirm any deal but said the agency's growing financial troubles will soon be relieved.

BDDP's woes are largely a problem of failing to take into account the end of the go-go 80s.

The company's debt, taken on to finance the expansion of its sprawling network, would have been easily repayable when the shop was posting solid 15% annual growth in both billings and revenues a decade ago. But the recession-ravaged 90s have hurt the agency's ability to pay back. BDDP, however, is successfully trying to hold onto its own by relying on refinancing and other alternativesto shuttering units, effecting mass layoffs or cutting salaries.

In fact, with $293 million in gross income in 1992, BDDP grew to France's third largest agency and the world's 14th largest advertising organization through an ambitious expansion strategy started in the late 1980s. But the growth came with a price, debt, now estimated at $150 million.

Reality has also set in: Gross income rose only 6% in 1992 and the percentage is expected to be even lower for 1993 when final figures are in.

Perhaps by its very refusal to cut staff and therefore service, the agency has continued to win its share of new business and has lost relatively little although like other European networks it has seen clients hold the line on budgets. Billings in 1993 were down in most European offices, except Germany, where BDDP won BMW business and opened its first office in the country.

Clients have remained loyal.

In France, officials at Virgin Megastores said they were not even aware of the financial problems, and were happy with the agency's work. An executive at BMW France said the financial troubles had not changed the relationship. "We have no intention of leaving," he said.

But clients aren't spending appreciably more and the agency's financial problems have affected its ability to meet its loan agreements, held by France's eight largest banks.

Without relief from the banks, BDDP would be forced to seek other money from other sources, most likely from an agency interested in equity.

Nonetheless, Mr. Boulet said BDDP will remain independent.

"We are not about to go off and marry anyone," Mr. Boulet said. "We are in the process of lowering our debt, which will make us stronger. That is the truth, and that is all I can tell you."

It is understood that BDDP's eight French banking partners are preparing to subscribe to a convertible bonds issue that would decrease management's stake, but allow managers to retain a majority vote and control of the agency.

The solution is especially appealing to BDDP because banks traditionally eschew becoming direct shareholders. Such an arrangement also fosters in BDDP managers a belief that they will be able to buy back shares as the agency's balance sheet improves.

Reports had been circulating for months of BDDP's search for an agency, among them Saatchi & Saatchi Co. and Euro RSCG, to acquire a stake.

Mr. Boulet insists that BDDP was not close to selling out to Saatchi.

"We never negotiated with Saatchi-it didn't happen. People like the idea of us being married off with another Procter agency. I'm sorry, but it's not happening."

Other executives said, however, that the marriage fell apart because Saatchi could not raise enough money.

French ad industry executives said the notion of linking BDDP to Euro RSCG was actually floated by the creditor banks. But differing agency cultures and client conflicts hindered this, including BDDP's BMW, bank Credit Commercial de France and insurance company Union des Assurances de Paris accounts vs. Euro RSCG's Peugeot/Citroen, Banque Nationale de Paris and Assurances Generales de France business. Possible anti-trust problems also worked against such a combination, since the two would hold 40% of the French market.

But an even greater problem was the two agencies' outright hostility towards one another. BDDP is often depicted as the upstart challenger to the institutional advertising giants like Havas-owned Euro RSCG and Publicis.

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