Geon at breaking point as receivers point to job cuts and closures

Receivers McGrath Nicol released a statement this afternoon saying the decision by "key paper suppliers" to cut off supply meant it would have to "undertake an urgent appraisal of the business to consider cost reduction strategies which could involve plant closures and job losses".

The firm added: "Geon will continue to operate in the near-term while the appraisal is undertaken. The receivers will also explore going-concern sale opportunities."

Up to 1,000 jobs in Australia and New Zealand hang in the balance.

ProPrint has also been leaked a copy of a memo to staff sent by Geon chief executive Graham Morgan earlier today, in which he praises workers and calls this week “the toughest work week of my career”.

Morgan wrote that for Geon to survive, it needs support from staff, clients and suppliers.

“A number of suppliers have offered their support to the receivers too but a number of suppliers are also proving difficult to lock down.

“Most critical right now is the supply of paper. To date, we have not secured supply from our key paper suppliers and we all know that if this isn’t resolved in the next couple of days, the receivers will have very significant problems in trading our business.

“I have tried all week to unlock the issues that the key paper merchants have and, even up to last night, I have tried many different approaches to get paper coming into our business again. I will not give up and keep trying everything I can think of – but we all know that time is limited," wrote Morgan.

Shaun Fraser, Jason Preston, Murray Smith and James Thackray were appointed as receivers on 21 February.

BJ Ball, Paperlinx and KW Doggett told ProPrint on 25 February that they had decided to stop supplying Geon.

Fraser said: "Despite indicating to paper suppliers how important it was for Geon to continue to receive supply in order to preserve the company’s value, maintain employment and avoid liquidation, supply has not been forthcoming.

"Continuing to supply Geon during the receivership carried negligible credit risk for suppliers as they benefit from a super priority guarantee of payment provided by the receivers.

"We are terribly disappointed at this outcome as the suppliers' actions add to the uncertainty for creditors and employees."

Fraser said one positive note was that there had been "strong interest" in Geon's regional and specialist operations from small competitors and Geon's local management teams.

"We will continue those operations while negotiations with bidders continue," he said.

"Securing going concern sales of those business units would provide the best possibility to maximise ongoing employment opportunities for Geon staff.

"The process is expected to take place over the next seven-to-ten days and we will continue to communicate with all key stakeholders throughout this challenging process."

[Related: Ups and downs of Geon]

Comment below to have your say on this story.

If you have a news story or tip-off, get in touch at editorial@sprinter.com.au.  

Sign up to the Sprinter newsletter

Leave a comment:

Your email address will not be published. All fields are required

Advertisement

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from our team.
Advertisement