Marketing services group Media Square has been acquired in a management buyout led by its chief executive Peter Reid and chairman Roger Parry, in a deal understood to be worth between £10m and £15m.
The company, which is struggling under a debt burden of more than £21m, ceased trading on the stock market earlier on Thursday after its bank, Lloyds, refused to pump in more cash or alter the terms of its covenants.
PricewaterhouseCoopers was appointed as administrators to handle the closure of the holding company, Media Square plc, but the 10 individual marketing services agencies it owns continued to trade as normal as they operate as separate legal entities.
MSQ Partners, a company founded by Reid and Parry, has bought the agencies in a deal that is understood to have roughly halved the £21m debt load.
The deal is comprised of a debt package agreed by Lloyds as well as equity put in by MSQ Partners, understood to total somewhere between £10m and £15m.
It is understood that all Media Square's creditors – except Lloyds – have been paid in full and that a "significant number" of the senior management of the 10 agencies will end up participating in the management buyout.
Media Square employed a total of about 650 staff across its 10 subsidiaries, which include ad agency Chick Smith Trott, with about 50 of these considered to be senior managers.
"An employee-owned structure where the employees take the majority control and can share in the future success of the business is one that we believe will see our agencies realise their full potential," said Reid, founder of MSQ and former chief executive of Media Square. "The debt burden of Media Square was holding back these businesses and as part of the transaction a much more appropriate and sustainable financial structure has been implemented within the group."
The deal also sees MSQ take control of the legal action that Media Square has brought against David Wright, founder of financial PR empire Citigate, over an alleged "conspiracy" to take over the company. MSQ is seeking almost £1m in damages.
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