Maiden considers options after sales slump

UK advertising firm Maiden today said it was examining its future options after a string of setbacks put it in breach of its banking covenants.

Maiden, which sells space on billboards and posters at roadsides and rail stations, revealed that it was staring at an operating loss this year after sales fell “significantly short of expectations” in November and December.

Delays meant it was also struggling to generate extra revenues from new contracts, the London-based firm said in a statement.

Shares in Maiden fell as much as 17% after the firm warned that it will absorb a number of one-off hits this year, including a high level of bid costs as well as consultancy fees and bank charges.

Maiden revealed that it would make a provision for legal costs racked up during a year-long row over a sales agency agreement.

The burden of paying signing-on fees during the first year of contracts was also likely to hit its financial results.

Maiden said: “This performance falls technically outside the covenant levels in Maiden’s banking facilities, but the group is working closely with its banks to address this.”

At the same time, Maiden revealed that a major deal which would have given it around 25% of the outdoor advertising market in the Republic of Ireland had fallen through.

Maiden said it was “unable to agree satisfactory terms” with CIE, the state-owned Irish rail and bus operator, for the five-year contract that was due to begin in January and was expected to be worth some £80m (€118m) in advertising revenues.

“Notwithstanding a year of considerable development for the group in which major contracts have been won and renewed, the board has decided to appoint NM Rothschild to assess the future strategic options for Maiden,” it said.

Analysts expect Rothschild to try and find a buyer for Maiden, which is currently worth £38m (€56m) after being valued at £120m (€177m) at the start of 2005.

Maiden has panels at more than 500 railway stations around the UK and its retail division controls the advertising rights to around 118 shopping centres.

It recently extended a deal with property developer LendLease covering shopping centres such as Bluewater in Kent, and signed a new contract with Westfield that includes the Merry Hill centre in the West Midlands.