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WPP extends $420m debt facilities ahead of half year financial results

WPP AUNZ has renewed and extended its debt facilities, totalling $420m, ahead of Thursday’s release of the advertising holding group’s half year financial results.

The debt facilities are spread across a syndicate of four banks, and include a $270m three year facility and a $150m rolling annual working capital facility. The extension sees the maturity of the $270m facility extended from June 2021 to August 2023.

The $150m working capital facility was renewed in May from June 2020 to June 2021, and has now been renewed again to August 2021.

WPP’s local chief executive, Jens Monsees, said in a statement filed with the Australian Securities Exchange (ASX) that “extending our facilities proactively reduces financial risk in our business and provides stability and flexibility to drive growth”.

“Through this challenging economic and operating environment, we have taken a conservative approach to our financial position,” Monsees added.

The company’s approach to COVID-19, which has wreaked havoc on brands’ advertising budgets and evaporated rivers of ad spend running from media agencies to publishers, hinges on a $70m cost savings program. The bulk of those cuts come from a request for employees – which followed the same being asked of executives – to reduce their salary package by accepting a pay cut, using up annual leave, or moving to four day weeks or nine day fortnights.

In some WPP agencies redundancies have been necessary, where clients in sectors decimated by COVID-19 have drastically shrunk marketing spend to survive.

The pandemic has also sped up the implementation of the transformation strategy announced earlier this year, which has included establishing a Centre of Excellence and installing ‘campus’ leaders in each city. The holding company has also recently acquired a Perth creative agency that will become part of Wunderman Thompson, and disbanded Team Red, a bespoke agency created to service the Vodafone account just last year.

“WPP AUNZ implemented some changes to Vodafone account several months ago which created a range of new employee opportunities while a very small number of other positions moved to other parts of our business or left,” the company told Mumbrella in response to questions about the impact of the agency’s disintegration on staff.

Last year, WPP settled a court case brought against it by Team Red’s former managing director, who claimed there was a “boys club”, a lack of support, and other cultural issues at the agency.

WPP AUNZ’s share price is currently 32c, and its portfolio of agencies includes Mediacom, White Grey, Wavemaker, Mindshare, and Wunderman Thompson.

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