Interpublic Group – the world’s second largest agency holding company – announced Wednesday it had agreed with its lenders to extend the cut-off point for revamping its main credit agreements to February 10. The deal had been scheduled for completion yesterday.

IPG, which has had a hard time of it recently following revelations of accounting malpractice at the European offices of its McCann-Erickson WorldGroup unit [WAMN: 10-Dec-02], has also suffered from declining ad revenues worldwide.

It is under duress to reduce its indebtedness to a syndicate of banks – currently around $875 million (€827.95m; £545.39m) in the form of two revolving credit facilities.

IPG also intends to “explore strategic alternatives” for a recent acquisition – Connecticut-headquartered market research specialist NFO which has offices in forty nations – for which purpose it has hired Goldman Sachs, whose fee will doubtless add several hundred meters in height to the group’s existing debt mountain.

NFO was acquired in the heady days of 2000 when the gods [aka investment banks] showered millions of hundred-dollar bills on anyone who wanted to buy anyone else. In a bidding battle royal, IPG’s $624m offer saw off a host of rivals, among them WPP Group. Few believe IPG will see its money back in the colder light of 2003.

As an interim measure, Interpublic has accepted increased interest rates plus commitment fees. It has also agreed to “limit its cash acquisitions” and “not take any dividend action” until the bank negotiations are completed.

Observed analyst David Doft at CIBC World Markets: “This can only be a positive thing in terms of getting its financial house in order. It buys the company more time to firm up the balance sheet.”

Data sourced from: The Wall Street Journal Online; additional content by WARC staff