According to a report in the Australian Financial Review the sale may result in the break-up of the group, and at best is likely to raise little more than a third of the NZ$385 that Champ paid for the company six years ago, and is unlikely to get anywhere near the company’s debt level, leaving the long suffering bondholders with nothing.
Blue Star’s ambitious 26.5 per cent growth target for a $53.6m earnings figure this year has already failed. Blue Star’s figures earlier this month reported an operating loss of $15.6m for the first half of this year, $9.3m more than the previous corresponding period last year. Sales revenue for the six months was $280.3m, some $13m less than 2010’s result for the same period.
Blue Star’s earnings before interest and taxes of $20.7m was marginally lower than the previous year’s $24m as the group continued to see decline in sales which saw a 4.4 per cent drop compared to the previous year.
In a letter to the New Zealand stock exchange, Blue Star says that Goldman Sachs will undertake the sale process for the Group, either in whole or in parts, on a going concern basis and with continuing support from its senior lenders.
Blue Star has already offloaded its labels business Rapid Labels to former director John Sturgess’s Tiri Group.
The company also announced the retirement of director Roger France from the board, effective from August 1. It said that France stated in his letter of retirement that, “the sales process contemplated in the release to the NZX on the evening of 29 June, which I fully approve, is now well established with the support of the group’s bankers and with sales advisors appointed. Given the experience of the other directors the sale process will be well managed and in these circumstances it is timely and appropriate that I retire.”
The letter also stated, “While the underlying divisions all continue to trade profitably at an ebit level, and the board believes the company has performed well relative to the wider print market, the Group financial performance remains well below the forecast profitability signalled in the Capital Bond Amendment document. In light of the sale process, the Board is unsure whether any value will attach to the Group’s NZDX listed bonds.”
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