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Y&R files for $350M offer
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February 27, 1998: 1:00 p.m. ET
Long-awaited IPO filing discloses two years of losses due to recapitalization
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NEW YORK (CNNfn) - Young & Rubicam Inc., the world's fifth-largest advertising agency, filed documents to sell its long-awaited initial public offering with hopes to raise an estimated $350 million.
Terms of the stock offering weren't set.
In a filing with the Securities and Exchange commission, the 75-year-old company - one of the last major ad agencies still on Madison Avenue - disclosed losses during the last two years despite consistent revenue growth.
As a result of a major recapitalization that transformed the employee-owned company into a closely held concern, the group recorded $238 million in losses in 1996 despite $1.22 billion in revenue. The results included a charge of $315 million.
The losses continued into last year despite major new business from such companies as Citicorp., which consolidated its $500 million account. For the year, Y&R lost $23.9 million as revenue grew to $1.38 billion.
The 1996 recapitalization left Y&R with a $700 million senior secured credit facility. As of December, there was an aggregate of $330.6 million outstanding, which bore interest at an annual rate of 6-7/8 percent. A portion of the IPO proceeds will be used to retire debt.
Currently, a little over 50 percent of the agency is owned by senior management. The rest is held by Hellman & Friedman, a San Francisco-based investment firm, and its affiliates which are also expected to sell a portion of their equity.
In addition to the ad agency, Young & Rubicam Inc. consists of public relations firm Burson Marsteller, direct marketer Wunderman Cato Johnson and Internet firm Brand Dialogue.
Donaldson Lufkin & Jenrette Securities and Bear Stearns are serving as lead underwriters of the sale.
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