LONDON, June 9, 2003 (PRIMEZONE) -- Cordiant ("the Company") (NYSE:CDA) (LSE:CRI) has entered into a conditional agreement to dispose of its 77.3% interest in Scholz & Friends A.G. ("Scholz"). It is proposed that Cordiant's interest in Scholz is acquired by a new corporate entity ("Newco") which, on completion, will be owned by Electra European Fund LP and Scholz management. This transaction represents the second step in Cordiant's stated plan to reduce debt through a programme of non-core asset disposals.
The cash proceeds payable to Cordiant in respect of the disposal of Scholz are Euro 22.4 million (15.8 million Pounds) which will, after deduction of transaction costs, be used to repay debt. A further Euro 1.5 million (1.0 million Pounds) may become payable in March 2004 dependant upon the performance of Scholz for the year to 31 December 2003. This amount will also be used to reduce borrowings. Scholz will repay loans made by Cordiant totalling approximately Euro 7.5 million (5.3 million Pounds) by 31 December 2003 at the latest.
Scholz is an integrated advertising and marketing communications group offering a pan-European network focused on servicing the needs of both national and multi-national clients. In addition to advertising, Scholz offers services in a range of marketing activities including programming, interactive, design, sponsorship, entertainment, trade-marketing, consulting, public affairs, CRM, promotion, event/trade shows and public relations.
In the year ended 31 December 2002, Scholz generated revenues of Euro 61.7 million (43.5 million Pounds) and profit before tax of Euro 2.8 million (2.0 million Pounds), on the basis of UK GAAP. Net assets attributable to Scholz as at 31 December 2002 were Euro 9.1 million (6.4 million Pounds).
The Bates Group and Scholz have historically been operated as independent entities and are direct competitors. Accordingly, the transaction is not expected to have a material operational impact on any other part of the Group.
A circular will be sent to shareholders in due course seeking their approval for the disposal of Scholz.
Note: The exchange rate used in this announcement is Euro 1.42 to GBP 1.00 Pounds as at June 6, 2003