Chime escapes asset sale to bail itself out of trouble
LONDON - Lord Bell, chairman of Chime Communications, has been told he will not be forced by bankers to sell any of the company's assets to bail the company out of financial trouble, after its shares fell as much as 74% last month.
Bell admitted in mid-November that the advertising and PR group's full-year results would be well below expectations, after it said it got it wrong when it forecast that the company's performance in the second half of the year would be stronger that the first.
Shares in Chime fell to 14.75p after the warning, a drop of 74% and have moved little since. This morning, they were trading at 15.25p.
At the time of the profits warning, the company revealed it had breached a loan agreement when it was hit by a restructuring charge of £12m, prompting its bank Royal Bank of Scotland to order a review of the business by accountants PricewaterhouseCoopers.
PwC is believed to have concluded that Chime can trade its way out of trouble, rather than sell assets.
The news will mean that Lord Bell, a former PR adviser to Margaret Thatcher, can continue his negotiations with WPP Group chief executive Sir Martin Sorrell about the sale of its advertising agency HHCL & Partners, which Sir Martin wants to become the London arm of WPP's Red Cell advertising network.
A deal would see WPP, which already owns 20% of Chime, increase its stake in company. It had been reported that Bell would ask for cash for the agency to help him get Chime back on its feet, but this would most likely have resulted in Sir Martin walking away from the deal, unwilling to part with cash during the downturn.
Reports have also suggested that the management of Chime's Good Relations PR agency have been planning a buyout, although this is not expected to go ahead.
In the first half of this year, Chime's profits fell by 42% to £5.2m, hit by account losses at HHCL.
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