NEWS9 December 2011

‘No return’ for shareholders from Media Square MBO

Financials UK

UK— Media Square shareholders won’t see a penny from the management buyout of the group’s ten agencies for a reported price of between £10m and £15m.

The MBO, which was announced yesterday, was led by Media Square’s chairman Roger Parry and CEO Peter Reid and was backed by the company’s bank, Lloyds. All creditors have been paid, but Media Square said today that the transaction “will not result in a return to shareholders”.

Media Square, the holding company, has been declared insolvent and administrators from PricewaterhouseCoopers have been called in. The company was unable to meet its debt repayment obligations after being refused an extension or waiver of its loan terms by Lloyds.

The buyout, by Parry and Reid’s MSQ Partners, was completed within hours of administrators being appointed. The group of ten former Media Square agencies, including research firm Illuminas, PR agency Smarts, design firm LloydNorthover and ad shop The Gate Worldwide, will be employee-owned, with shares likely to be distributed among the senior management of each firm.

In total, the agencies employ more than 650 staff and have annual revenues of approximately £45m, with operations in the UK, US, Hong Kong, China and Singapore.