The company is also dropping the word Print from its company name, from September it will be known as Blue Star Group, in order it says to better reflect the continued broadening of the Group’s offerings in the visual communication market
Under the new financial arrangement BSPG’s owner Sirius is injecting NZ$10m into the business, and interest payments to bondholders have been suspended, but with the trade-off that when they resume interest payable will rise by from 9.1 per cent to 13.1 per cent.
Blue Star’s full results are due out on Friday, and expected to reflect the difficult trading conditions in Australia and New Zealand, especially in the sheetfed business units. Blue Star’s turnover was around $500m last year.
Chris Mitchell, group managing director of Blue Star explained to Australian Printer, “We have publicly traded bonds and have continuous disclosure obligations, as such we announced some major changes that further strengthen our financial position. We have not breached any of our covenants and the new arrangements we have just announced will provide the headroom to ensure this remains the case. As you will see from the announcement we have had further equity injected by our major shareholders and a reset of our covenants.”
Mitchell says, “We have made a lot of progress in our multi-year transformation strategy and these new arrangements provide the flexibility we need to continue with that progress.
Sirius reached an agreement with its senior lenders to reset the company’s banking covenants, amortisation and related pricing structure. The resulting financial flexibility afforded by this new agreement will enable BSPG to continue the multi-year transformation strategy that has already seen a significant cost reduction and a restructuring of the company’s core operations.
Mitchell described the suspension of bondholder interest as not unusual saying, “This measure is somewhat similar to decisions by many publicly listed companies, in the current difficult economic environment, to forego or reduce dividend payments.”
The company will resume payments as soon as permissible under the senior funding arrangements, including payment of the compounded interest. BSPG says the new financial arrangements have the full support of major equity holders, senior lenders and management, and it says will enable the BSPG to further grow the Print Management, Webstar and Direct Mail business units, while also continuing to transform the general print businesses.
Mitchell says, Despite the extremely difficult trading environment experienced since the start of the financial crisis BSPG continues to generate good cash profits and strong cashflows. As a result of the extra capital, new banking arrangements and the restructuring measures already taken we are in a strong position to continue with our transformation plan.”
