A Hong Kong print group has bought the $51m debt of troubled printer Opus Group from the Commonwealth Bank for $20m, becoming its effective owner and biggest lender. The deal sees long time Opus ally 1010 Printing Group pay CBA the $20m straight away, and take on a further $31m owing in September 2016, as the bank cuts its losses after a series of deadline extensions for the debt last year. Opus says it will work out new terms of debt that will provide ‘financial stability’ for the heavily leveraged printer, which lost $35.3m last year thanks to a more than $34m write down of its goodwill and Australian publishing assets. The Hong Kong firm is likely considered a friendlier creditor than a bank, though what 1010 stands to gain from buying out CBA’s debt, the conditions it will place on the loan, and what it expects in return are still unclear.
Cliff Brigstocke
Cliff Brigstocke, CEO of Opus, declined to comment with the transaction underway. A statement says, “As soon as possible after settlement, 1010 has advised that it will explore possibilities to restructure the debt and for new capital to be injected.” An announcement on plans for an equity recapitalisation involving 1010, Opus and potential third party investors is expected in the ‘near future,’ once shareholders have approved the arrangement. When asked why it chose to sell its debt for much less than its value, CBA said the terms of the deal mean it is not allowed to comment. The move is part of Opus’ ongoing capital raising attempts to increase its equity capital and reduce the current gearing. Bill Mackarell, chairman of Opus, blames the company’s woes on a financial structure that has ‘shackled’ it from “aggressively pursuing the many opportunities that are available.” Opus and 1010 have had commercial links for several years through senior management, though they are, by Opus’ admission, competitors in some areas. Opus says, “As the product offerings are largely complementary and in many cases to the same international customer base, Opus and 1010 have consulted from time to time on business initiatives and as a result have developed a mutually respectful relationship.”
Bill Mackarell
Mackarell singles out Chuk Kin (CK) Lau, executive director of 1010, as a strong ally and says the board is pleased his company has demonstrated such ‘strong support’ for Opus by committing ‘substantial funds, time and effort.’ He says, “Some of us have known CK Lau for a while and his impeccable reputation in the international print industry is a strong endorsement of Opus.” 1010 provides printing services to international book publishers, trade, professional and educational publishing conglomerates, and print media companies. Its printed products include illustrated leisure and lifestyle books (including photography books, cookbooks and art books), educational textbooks and learning materials (including primary, secondary and tertiary level school books), and children’s books.
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