Industry’s day from hell: now Geon put into receivership

The receiver is McGrath Nicol. Geon has also appointed PPB Advisory as voluntary administrators.

The news comes on the same day as the collapse of major Melbourne printer Vega Press, which also went into receivership.

The Geon story is still unfolding, but it is understood that US-owned KKR and Australian company Allegro Funds, which jointly own Geon's debt, put the print group into receivership as a means to convert their debt to equity.

It is not clear what this will mean for Geon's significant debts to the likes of paper merchants and equipment and trade suppliers.

McGrath Nicol will now run a sales process for the print giant; it is understood that KKR and Allegro will participate in this sales process and seek to buy the company back as a going concern.

ProPrint has received a copy of the memo sent by Geon chief executive Graham Morgan to the group's hundreds of employees.

“A receiver, McGrath Nicol, has been appointed and they have taken control of Geon’s business and assets," write Morgan.

“Offers for the business will now be taken by the receiver, respected firm McGrath Nicol.

“On that point, I have been advised that KKRM [KKR and Allegro] have already submitted an offer for the business from KKRM and they are committed to working with the receivers to finalse the offer in the shortest timeframe practicable.

“This does not preclude other offers coming forward to be considered by McGrath Nichol and they will assess what is in the best interests of Geon.

“However, the offer from KKRM, received soon after McGrath Nichol’s appointment, reinforces the positive view they have about the future of Geon as I have previously said to you.

“As long-term believers in this business, KKRM has informed me that if their offer is acceptable to McGrath Nicol that they will commit substantial resources to make Geon successful, including the availability of additional capital and significant senior operational and financial resources.”

More details were reported by Fairfax.

The trans-Tasman group is one of the largest printers in the region and any fallout could have massive ramifications across the industry.

It is too early to gauge the exact size of the debts and how this process might impact unsecured creditors, but it is understood the exposure among paper merchants and equipment suppliers is enormous.

[Related: Ups and downs of Geon]

Questions have been asked about Geon's future during the past year as key staff have left the business.

The past 12 months have seen the departures of chief operating office Scott Thompson, head of operations Roger Kirwan, New Zealand chief Andrew Durrans, eastern seaboard general manager Glen Draper and NSW head of sales Kim Lykissas

There was further speculation in October when Geon's banker, Bank of Scotland International, put Geon's debt on the market. That debt was acquired in November by US investment firm KKR and Australian fund manager Allegro.

Speculation about Geon's future intensified a fortnight ago when KKR and Allegro bought the company from Gresham Private Equity.

At the time, KKR spokesperson said then that the new owners would "look at the business and develop the strategy throughout that process".

Gresham's association with Geon began in 2005, when it bought a controlling interest in the Pacific Print Group, which it rebranded as Geon in February 2007. What followed was a strategy of consolidation, adding 15 companies to the trans-Tasman print giant, including the largest, Promentum Group, in May 2007.

Geon struggled to perform in recent years, gradually wiping value off Gresham's investment and forcing the private equity firm to tip in more money, including a massive debt-for-equity swap in 2011.


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