Bondholders voted 76.9 per cent in favour of the refinancing proposal, surpassing the required 75 per cent approval. The package includes the extension by senior lenders of existing funding lines, the provision of further liquidity and the easing of covenants, plus the provision of NZ$15m in new funding by the group’s principal shareholder. Under the terms of the deal, bond holders will receive their first interest payment in October 2013.
Blue Star asked bondholders to forgive $NZ32.3m in unpaid interest on their bonds since payments were suspended in August 2009 and to convert two-thirds of their NZ$105m in $1 bonds into amended capital bonds at 64c. The other third is to be converted into limited recourse, subordinated participating bonds.
At the meeting, held at the Ellerslie Convention Centre in Auckland, Chris Mitchell, managing director of Blue Star, explained the company’s strategies for the future, listing changes the company has made to turn around the problems it faces. He said these changes will help with the forecast gain of 26.5 per cent in profitability. Strategies include cost reduction programmes, which have resulted in the removal of middle management; a reshaping of the Australian sheetfed market and introducing new technology such as digital inkjet; an investment in more profitable segments of the print market such as the recent ACP contract, which led to the establishment of the heatset plant in Waitakere; and winning major new contracts.
He said, “We believe this is the best chance of getting our money back. This is a good business, a manufacturing business with a good strategy. I guess the bottom line is we need more time. We just can’t get there in the time frames that the debt maturity is dictating.”
Before the vote, scrutinised by Price Waterhouse Coopers, board members fielded questions from bondholders for over two hours. Bondholders criticised the board for lack of communication and pointed to an independent report which they said they had received unfair treatment. While it failed to reach consensus, the meeting took place in an orderly fashion. Blue Star directors left bondholders in no doubt that they believed a no vote would have led to receivership.
After the vote, Mitchell said, “We are humbled by the whole process and obviously very pleased that we have secured a yes vote. As it turned out, nearly 80 per cent of bond holders voted and of those 76.9 per cent voted in favour. The company can now get on with the business of delivering great value to it’s customers.”
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