The largest creditors of one of Australia’s most significant print, marketing and distribution companies, Ovato, have now approved a 50 cent in the dollar pay deal for outstanding bills.
The vote, held by Zoom and convened by Ovato yesterday, resulted in unanimous approval of the scheme with one more hurdle remaining – a court appearance on Friday December 18 – before the full restructure and recapitalisation plan can be rolled out.
Ovato CEO Kevin Slaven said in a statement to the ASX:
“The vote is the next key milestone on the path towards implementation of the restructure and recapitalisation of the business, involving a capital injection of up to $40 million, 300 redundancies and the closure of the Ovato printing plant at Clayton in Melbourne.”
The company launched the legal bid last month in a bid to ensure its ongoing viability and the continued employment of 900 people.
The NSW Supreme Court will have the final say on December 18 and providing this is approved Ovato Print Ltd, Hannanprint NSW Pty Ltd, Hannanprint Victoria Pty Ltd and Inprint Pty Ltd will be placed in the hands of liquidators.
Three hundred people across Australia are set to lose their jobs and have been directed to apply for their redundancy payout via the Fair Entitlements Scheme (FEG).
The timing of this has caused significant stress for many of these employees as they will not be technically be able to apply for their payment until Monday December 21 which coincides with the week of Christmas.
So long as these approvals are made, the Hannan family and Are Media Pty Ltd, an entity related to private equity firm Mercury Capital, will tip in $35 million for the forward operation of the print business as it looks to return to viability in 2021.
Some redundancy payments could be made early
Ovato’s spokesman said the company is doing all it can to assist these employees and will help with the FEG payment submissions, as well as provide outplacement services.
He also indicated that some redundancy pay could be made earlier, but pointed out this will be in the hands of the liquidator to approve and coordinate.
“We have initial indications from our advisors that a proportion of employee entitlements can be paid on the date of the redundancies,” the spokesman said.
“We are exploring other avenues of potential financial assistance to bridge the gap between redundancy and FEG payment of the balance of the entitlements.
“At this stage the gap will be no longer than eight weeks.
“We are also committed to doing everything we can to assist those exiting the business and we will remain supporting these employees including providing comprehensive outplacement support and will assist in FEG paperwork and applications.”
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