Representatives of Blue Star Group and its majority shareholder Champ Private Equity are in "serious talks" with the commercial printing firm's banks with administration among the options under consideration, The Australian Financial Review reports.
The AFR notes the move comes less than a year after Blue Star refinanced its senior debt - when bondholders voted narrowly in favour of a controversial refinancing proposal.- and extended its debt maturity to 2015, ostensively to give management time to revive the company. Its banks include BNZ, ASB's parent Commonwealth Bank of Australia and Bank of Scotland.
Champ bought the Auckland-based Blue Star, which operates in both New Zealand and Australia, in December 2006 in a deal that gave the firm an enterprise value (including debt and equity) of NZ$385 million. Champ took an 84% stake with management and the previous controlling shareholder and managing director, Tom Sturgess, collectively retaining 16%.
Blue Star, which has bonds listed on the NZX, has been hit by weak operating conditions, aggressive price competition and weak international paper pricing, the AFR says. It has about 1,800 staff.
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Blue Star has released this statement this morning:
Shaeholder Update 8:51am, 2 Jul 2012 | GENERAL29 June 2012
The Board, with the support of its major shareholder, has been conducting a review of the group’s operations, focussing on a potential sale of all, or parts, of the business. In connection with this review, the Group has entered into an agreement with its senior lenders to maintain their support during this process.
The Board has received an unsolicited conditional proposal to acquire all of the business. For confidentiality reasons the terms of this offer cannot be disclosed but it does reflect the well-publicised difficult trading and economic conditions affecting the print industry.
The Board has also received unsolicited approaches to acquire certain divisions or business units within the Group.
There is no guarantee that any offer or approach will complete or, if it does, what value would accrue to the various stakeholders in the Group.
The Group expects to enter into a conditional agreement to sell its Rapid Labels division in the coming days.
As noted in the quarterly report on 25 May 2012, trading conditions remain extremely difficult with continued covenant compliance reliant upon market conditions and the successful implementation of operational initiatives.
In light of the above process, the Board is unsure what value, if any, will attach to the Group’s NZDX listed bonds (code BLUFC). However, the Board wishes to reassure staff, customers and suppliers that the directors intend to continue the business as normal, subject to the continued support of the senior lenders.
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