PR company embroiled in scandal over its practices in South Africa needs to service debts of about £4m

This article is more than 3 years old

This article is more than 3 years old

The embattled public relations firm Bell Pottinger is under pressure to find a buyer within the next month or it could face closure by the end of the year due to mounting debts.

The company, which is fighting to hold on to staff and clients after being embroiled in a scandal over a secret campaign to stir up racial tensions in South Africa, is understood to be £4m to £5m in the red.



Bell Pottinger said that finding a buyer was one option being considered but that it was not a forced seller.

Bell Pottinger expelled from PR trade body after South Africa racism row Read more

However, according to two sources familiar with the matter the PR agency could breach covenants with its bank by Christmas without new financing.

The agency – the first major PR consultancy to be struck off by its own trade body – has appointed accountants BDO to rush through a “pre-pack” sales process and inform potential buyers within four weeks.

It is understood that the international communications group Lewis, founded by Chris Lewis, has expressed interest in buying Bell Pottinger. However, no deal has been agreed between founder Tim Bell and the largest shareholder, James Henderson, who have both left the business.

Lewis did not return a request for comment.

According to sources Bell Pottinger will unveil a new management structure later this week – including a new chief executive to replace Henderson, who stood down on Sunday.

None of the top management will hold a stake in the business, in a move designed to try and create a separation between its day-to-day running and the shareholders.

Bell Pottinger is estimated to be worth about £20m, based on profits of about £4m and revenue of just over £40m. However, since the scandal has engulfed the company, the brand damage and client and staff exodus has turned the process into a fire sale.

According to two sources, Bell Pottinger’s debt was ratcheted up due to a share buyback and restucturing costs related to the departure of Bell and other senior staff last summer.

It has also emerged that two more clients had severed ties with Bell Pottinger, taking the total to nine since the Public Relations and Communications Association expelled the agency for what it said was the worst violation of ethics by a member in its history.

The UK-based publicly listed company Ascential is understood to have stopped using Bell Pottinger for its World Retail Congress event.

“Ascential reviews its global PR roster on an ongoing basis to ensure all continue to deliver exceptional work and value for the company and our products,” the company said.

It has also been reported that the Singaporean investment company Temasek hadended its relationship with Bell Pottinger, adding to a string of departures including Clydesdale Bank, the construction company Carillion, HSBC, TalkTalk, Richemont, Investec and Acacia, which owns goldmines in Tanzania.



Earlier this week, it emerged that Bell Pottinger’s second-biggest shareholder, Chime, owned by US firm Providence and Sir Martin Sorrell’s WPP, had handed back its 27% stake to the board for free.

Chime had been trying to sell its stake for about a year, but once the scandal reached boiling point in the summer it took the decision to wash its hands of its shareholding. The company will take a non-cash writedown of about £5m on giving up the stake.