In an exclusive interview with ProPrint, KKR’s global co-head of special situations, Jamie Weinstein, and Allegro managing director Chester Moynihan have spoken for the first time about their plans for the print group and their thoughts on the supplier boycott that derailed the strategy.

Much of the claims are moot points, as the pair's acquisition play never got off the ground, leaving Tom Sturgess to buy the New Zealand labels business and Blue Star to scoop up the customer lists of Geon's NSW and Victorian operations, while the Queensland business was wound up.

Geon's New Zealand, West Australian and Tasmanian divisions have remained in limbo, with decisions expected this week.

KKR and Allegro, jointly called KKRM, first got involved in Geon last year when they acquired the group's debt and replaced private equity firm Gresham as its owner.

Moynihan said that KKRM planned to invest in Geon to revitalise it, particularly the profitable Perth operation.

"Essentially we had good performing businesses in Western Australia and New Zealand. Tasmania was OK," said Moynihan. “The burning platform, if you like, was the eastern seaboard, which was really Brisbane, Sydney and Melbourne."

"Our thoughts were really around investing in the West Australian business, which had been capital-starved and was crying out for better quality equipment and moving more to digital technology. They were a profitable business with great customer relationships and a great team. So it was very much an investment strategy into WA."

The talk of investment tallies with claims made by former Geon chief executive Graham Morgan at the time that the print group fell into the hands of two separate insolvency practitioners – administrators PPB Advisory and receivers McGrath Nicol.

[Feature: What will emerge from the Geon ashes?]

On 21 February, Morgan wrote: "As long-term believers in this business, KKRM have informed me that if their offer is acceptable to McGrath Nicol that they will commit substantial resources to make Geon successful, including the availability of additional capital and significant senior operational and financial resources."

However, according to administrators PPB, the reason Geon fell into insolvency in the first place was because KKRM had refused a $3 million line of funding that would have kept it afloat.

But that lifeline would not have removed the issue of cash-strapped Geon's massive debt baggage.

This was the company's main challenge, according to KKR’s Weinstein.

"Any time you have a company with a balance sheet as stretched as Geon's was, the management team is running from crisis to crisis putting out fires and trying to stay afloat," he said.

"They don’t have the time and wherewithal to take a step back and think strategically about what they want the business to look like and make key strategic decisions. And in the case of Geon, they didn’t have the liquidity to fix the business.

"You actually have to spend money to make more money. Part of our belief was that we could supply additional capital to Geon to help them fix some of the operational issues that they had and create a healthier more profitable company that was a better place to work," added Weinstein.

Moynihan agreed that KKRM would have tipped fresh investment into the group.

"With New Zealand, our view was they had too many sites and management were of the same view. There was a strategy there around site rationalisation and, again, investment.

"These businesses, because of the situation with Gresham, had been starved of capital. Our plans here were to introduce capital and help generate better operating efficiencies," said Moynihan.

"The clear issue on the eastern seaboard was overcapacity and so we had plans to rationalise from three to two. We wanted to work with the efficiency of the sales team."

"We said we wanted 10 days, that’s all we said. Give us 10 days and we will come up with a firm proposal for you as to what the go-forward would look like," said Moynihan.

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But this plan was scuttled when suppliers cut off Geon unless the new owners would pay off the million of dollars of debt accrued before the group filed for insolvency – specifically because the plan would have seen Geon reborn with the same owners, the same management team, but with the debt wiped.

Weinstein said: "We tried every which way to communicate with the suppliers. Some of the suppliers wouldn’t return phone calls and those that did basically had no interest in hearing what we or the company had to say."

At the time, the paper merchants had separately told ProPrint that they had elected not to support Geon during the receivership unless their pre-appointment debt was paid.

Craig Brown, chief executive of the largest merchant creditor, BJ Ball, told ProPrint on 25 February: “Currently we have elected not to supply Geon under receivership and our position is clear, as always we will only supply on the basis that all amounts owing are paid in full."

Other merchants and suppliers offered similar sentiments.

The central issue in the entire saga – whether or not KKRM would have paid off any pre-appointment debt – may never be answered. KKRM have given some indication they were prepared to negotiate on the issue, but have never directly confirmed if they would have covered the former debts.

The final outcome may well be the same for suppliers. Only Tom Sturgess, who acquired the New Zealand label business, took on Geon's former debts. Blue Star did not take on Geon's liabilities and it is unclear whether potential buyers in New Zealand, Tasmania or Perth would either.

[Related: Ups and downs of Geon]

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