In a statement, the company says the deal 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”.
In June, BSPG announced it had completed the consolidation of McMillan Print into its Silverwater operations, with the McMillan facility at Granville being closed in the process. BSPG acquired McMillan in 2007.
“Another key component of the improved financial position is a deleveraging and consequent strengthening of the balance sheet in part through an additional NZ$10m provided to Sirius Holdco by its major shareholders,” BSPG managing director Chris Mitchell (pictured) said.
The deal will require BSPG to suspend cash interest payments under the subordinated capital bonds until interest can be paid in compliance with the company’s banking covenants. As part of the banking arrangements, the interest BSPG pays to bond holders will increase to 13.1 per cent per annum from the current rate of 9.1 per cent p.a., and will be compounded quarterly on the scheduled interest dates.
The company says it will “resume payments as soon as permissible under the senior funding arrangements, including payment of the compounded interest”.
“Despite the extremely difficult trading environment experienced since the start of the financial crisis, BSPG continues to generate good cash profits and strong cashflows,” Mitchell said. “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.”
The company also announced it will be dropping the word ‘print’ from its title as part of the “transformation”, adopting the name Blue Star Group “to better reflect the continued broadening of the Group’s offerings in the visual communication market”.
The company’s preliminary results for the 2009 financial year will be released on Friday.
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