LONDON: The UK-based advertising company WPP group has announced that it will buy the outstanding debt in Cordiant Communications Group for £90 million ($150 million), making it the sole debt holder of the troubled company. WPP bought the debt from Cerberus Capital Management, the US investment fund.

The acquisition, brings WPP another step closed to taking over Cordiant after agreeing on 19 June to acquire it in a deal that valued it at £266 million in stock and assumed debt, beating out the offer from its rival Publicis.

A Reuters report states that WPP faces a challenge from Active Value, a fund management firm, but this acquisition is seen strengthening WPP's hand against Active Value. Active Value is Cordiant's largest shareholder and is fighting to block WPP's takeover.

Last week, WPP paid Cordiant’s other debt holders £177 million for their debt, valuing it at par value, without having to make any extra so-called “make-whole” payment. WPP said it paid Cerberus £90 million for the debt with a par value of £79 million and an extra £11 million to cover accrued interest and “make-whole” payments, which are bonuses banks demand for lending to high-risk borrowers. The equity of Cordiant is valued at just £10 million through the deal.

Earlier this week, activist shareholder fund Active Value Fund Managers Ltd. boosted its stake in Cordiant to more than 25 per cent, allowing it to block WPP’s takeover deal, which requires the support of 75 per cent of shareholders.

Active Value hasn’t publicly stated its intentions, although analysts have speculated that they hope to force WPP’s Martin Sorrell to improve his offer, or flush out a better offer from Publicis Groupe SA or New York-based media company Grey Global Group.

However, WPP has said that if its offer is blocked it will force Cordiant into administration, which would leave shareholders with nothing and cause a client exodus. With 100 per cent of Cordiant’s debt, WPP is in a stronger position to make such a call.

Cordiant shareholders, meanwhile, will meet Saturday, 28 June in London to approve the disposal of the group's Australian and German businesses. The vote on WPP's takeover bid is planned for July.