Cordiant Communications Group plc Announces a Posting Today Regarding Shareholder Approval


LONDON, June 13, 2003 (PRIMEZONE) -- Cordiant Communications Group plc ("Cordiant") (NYSE:CDA) (LSE:CRI) announces that it is posting later today a circular to its shareholders seeking their approval for the disposals of 70 per cent. of The Communications Group, comprising its principal Australian businesses, and its 77.3 per cent. interest in Scholz & Friends. The details of these disposals were announced on 29 May 2003 and 9 June 2003, respectively. The extraordinary general meeting is to be held at 11.00 am on Saturday 28 June 2003. It is being held on this date because of the requirement that the disposal of The Communications Group is completed in Australia no later than 30 June 2003, the long stop date for completion.

On 29 April 2002, Cordiant announced that it had received very preliminary approaches which could lead to an offer for the Company. Since then, Cordiant has been actively evaluating a range of more detailed proposals, including possible offers for the Company or involving its recapitalisation. Cordiant has maintained a continuous dialogue with Cordiant's major clients who have indicated their preference for Cordiant to seek an industry partner.

The Board continues to advance its discussions with various parties and is seeking to bring them to a conclusion in the very near future in the best interests of the stakeholders of the Group and its clients. The Board expects to write to shareholders on this matter shortly.

These disposals will allow Cordiant to effect an important reduction in Cordiant's debt position. As at 30 April 2003, the Group's gross debt balance was 262.6 million Pounds, cash was 61.4 million Pounds and net debt 201.2 million Pounds. The increase in net indebtedness of 49.5 million Pounds between 31 December 2002 and 30 April 2003 is principally due to cash spend against the restructuring provision held in the 31 December 2002 balance sheet, a normal seasonal working capital movement and the impact of reduced media buying activity in the US. In addition there are material make-whole arrangements and other fees which are payable contingent on Cordiant's financial performance. In the opinion of the directors the Group does not, following completion of either or both of the disposals, currently have sufficient working capital for at least 12 months from the date of the circular. However, the Company continues to enjoy the support of its lenders, has resources to meet its current obligations and is actively taking steps to address the longer term working capital position, including constructively working with its lenders to secure long-term funding, execution of the disposal programme and consideration of a possible sale, or recapitalisation, of Cordiant.

During 2002 Cordiant implemented a restructuring programme to form the Bates Group to substantially reduce costs. The significant steps taken have created a cost base better aligned to the prevailing market conditions and have, in part, mitigated the impact of significant losses in the U.S. during 2002, in particular Wendy's and Hyundai. The Group has traded broadly in line with expectations in the first three months of this year, but since then has found it increasingly difficult in the current circumstances to win new business and retain revenue from existing clients due primarily to its current financial position. The outlook for the Group is likely to be below the Board's original expectations, notwithstanding the benefits of the restructuring which will mitigate to some extent the adverse impact of revenue shortfalls.



            

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