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LONDON-Cordiant's return to red ink last week made it clear why the holding company's new Chief Executive Bob Seelert plans to spend 40% of his time in the U.S.: There is trouble in America.

In the first half of 1995, Cordiant's U.S. operations had an operating loss of $4 million, vs. a $9.8 million operating profit a year ago; U.S. revenue fell 13.5% to $218.8 million.

Overall, Cordiant's $11.7 million operating profit-about one-third the $34.7 million for the first six months of last year-was wiped out by exceptional costs and a loss on the sale of Campbell Mithun Esty and closure of other offices, leaving the company with a first-half pretax loss of $47 million on revenue of $598 million.

The impact of losing Bates Worldwide's $350 million Mars Inc. account and Saatchi & Saatchi Advertising Worldwide's $90 million British Airways business will only be felt in the second half. Bates reportedly is also in danger of losing Miller Genuine Draft, worth $50 million. If that happens, Bates would be left with virtually no creative responsibilities for Miller, which would then call into question its $300 million media buying work.

Mr. Seelert attributed the poor U.S. performance to clients spending less than planned, the impact of client losses and renegotiation of compensation arrangements with some clients, whom he declined to name.

"We're expecting things are going to be a lot better for the second half in the U.S.," he said.

For the past couple of years, new-business efforts at Saatchi and Bates have been hampered by well-publicized corporate infighting at the holding company level, the ouster of former Chairman Maurice Saatchi last December and a subsequent legal battle eventually settled out of court.

"My view of U.S. clients .*.*. is that they make agency decisions based on entering a long-term strategic partnership with an agency," Mr. Seelert said. "When turbulence and instability surround the networks [at the holding company level], it's not a healthy environment for new business."

For longtime watchers of Cordiant, previously Saatchi & Saatchi Co., its struggle to boost profits, grow revenue, reduce debt and cut costs is a familiar one that a series of senior executives have failed to win. The company's first chief executive, Robert Louis-Dreyfus, saved it from bankruptcy with the help of Charles Scott, who succeeded him but failed to boost revenue. Maurice Saatchi's subsequent attempt to take a higher-profile role ended in disaster.

As an initial step this time, analysts favor a rights issue to raise about $240 million to wipe out the company's debt. Cordiant's bankers have taken advantage of the company's weak position to hike interest rates on the company's debt, increasing interest costs to $16 million during the first half of 1995 from $10.7 million for the same period last year.

After earlier denying that an unhappy Kobs & Draft, Cordiant's Chicago-based international direct marketing network, was trying to buy itself out of the group, Cordiant announced last week a proposed management buyout for $27.2 million led by Kobs & Draft CEO Howard Draft.

"We wanted more financial flexibility to expand into new specialty areas," said Lisa Wilcox, director of corporate communications for the shop.

Cordiant will have the right to acquire up to 25% of Kobs & Draft.

Mr. Seelert denied the Rowland Worldwide public relations network was also seeking a management buyout.

Mark Gleason in New York contributed to this story.

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