Advertising firm Maiden Group is for sale |
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Wed, 21 Dec 2005 17:05
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LONDON: U.K. advertising company Maiden Group has been put up for sale Tuesday after it disclosed that it may lose money this fiscal. The company, seller of advertising space on billboards at railway stations and roadsides, admitted that poor trading and costs linked to recent contracts will result in an operating loss, breaking its banking covenants on a 39 million-pound debt.
The company has engaged N.M. Rothschild to assess strategic options. Sources said potential buyers could be Clear Channel and Viacom of the U.S., France's JCDecaux and some private equity groups. The London-based company, now valued at 43 million pounds, is the fourth largest outdoor advertiser in the country.
Chief executive Ron Zeghibe, however, said the company can sustain itself with its cash on hand and it is not facing bankruptcy. He also disclosed that there could be a management buyout option, as he is the largest investor with a 15 per cent stake and the management as a whole owns more than 50 per cent in the company.
The company has panels at more than 500 U.K. railway stations and its retail division controls advertising rights at 118 shopping centres. It has signed a number of new deals since last year, including a 450 million- pound contract to run poster campaigns in 17 mainline stations and a contract for the Bluewater shopping centre. It said its contracts will not be affected by the covenants breach.
However, it has withdrawn from a five-year, 80 million-pound contract with Irish rail and bus operator as there was no agreement on the terms.
The company is making a provision for legal costs in view of an ongoing row over a sales agency agreement, while the burden on paying signing-on fees during the first year of the contracts will affect the results.
Maiden had reported an operating profit of 3.2 million pounds on revenues of 92 million pounds. Its shares fell 5.5 pence to a new low of 76 pence as the report came to be publicised.
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