The controversy surrounding the Media Square deal, which saw bosses buy back the company’s assets and relaunch as MSQ Partners – wiping out millions of pounds of debt – refuses to die down, with fresh claims that its bank colluded in the process.
According to reports in the financial press, a division of Media Square’s bank, Halifax Bank of Scotland, was in cahoots with the financially troubled marketing group going into administration in order to allow its directors to buyout the business.
HBOS subsidiary Uberior Trading has been identified as a subsidiary of MSQ Partners, set up by Media Square executives Roger Parry (pictured), Peter Reid, and Dean Wright. Uberior is Latin for fertile, fruitful, plentiful, and rich.
MSQ was formed in December following an £11m buyout of Media Square’s companies, after it was refused financial assistance by the bank with debts of around £26m. Its agencies include CMW, The Gate and Twentysix.
Bob Morton, the single largest shareholder in Media Square, has since lodged a formal complaint against its administrator, Price Waterhouse Cooper, describing the deal as a “sweetheart’ sale”.
“The whole nub of it is that the management have done this deal on behalf of themselves and not on behalf of shareholders, resulting in the bank losing £12m in a write-off… why wasn’t that done for the benefit of the shareholders?,” stated Morton.
Late last year, the deal was called into question by former Willott Kingston Smith boss Bob Willott – now a director of Fintellect – who called for a change in the law to block management buyouts which have not received the approval of creditors or shareholders.
Willott said: “At Media Square, despite their best efforts the incumbent management had failed to restore the company’s fortunes, so why should they have been rewarded with a second chance?
PwC has stated that all creditors would be repaid in full.
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Charlie says: This deal has obviously left a rather nasty taste in the mouth of many in the industry, and not just Media Square shareholders. Yet it isn’t the first agency group to suddenly reappear with the same personnel. In fact, many have done much, much worse, by wiping out all their debt, leaving creditors out of pocket and phoenixing into new businesses. Although that will not stop rivals complaining of sharp practice…