LONDON—Chime Communications, the public relations holding company run by Lord Tim Bell, lost almost three-quarters of its value last week after acknowledging that a restructuring cost of £12m had caused it to break its banking agreements. The company also warned investors its full-year results would be “well below” market expectations due to a continued decline in the advertising and financial public relations sectors.
Shares in the company—which owns Good Relations and Bell Pottinger in the U.K. and high-tech PR specialist LNS Communications in the U.S plummeted by 74.3 percent to just 9p after a statement: “In response to these conditions we have continued to cut costs, reduce our headcount and restructure our businesses to take account of adverse conditions. As a result we expect exceptional restructuring costs for the year to be £12m. This has caused us to be in breach of our banking covenants. We are in discussions with our bank which has said it continues to be supportive of our group.”
Chime said ad revenues had continued to decline in the second half of the year, and gains in public affairs and research had not been enough to offset those losses.
One result of the restructuring will be the merger of Bell Pottinger, best known for its corporate and financial communications expertise, with QBO, a consumer PR specialist. The merged firm will have a staff of 60, and Chime says there will be no layoffs as a result, although the group is expected to shed 150 jobs overall.
There is speculation in London that WPP Group, which owns 20 percent of Chime, could launch a takeover, and the company could prove a tempting target to Lord Chadlington’s Huntsworth Group, which has been aggressive on the acquisition front in recent months.