Australian group of specialist print and related service businesses and wholly owned subsidiary of Left Field Printing Group, Opus Group, has inked an agreement to purchase Ovato’s book printing business for $8.5 million.
Opus Group is a key player in Australian print, with a focus on book printing, as the owner of CanPrint, Ligare and McPherson’s Printing Group and is headed by executive director, Richard Celarc.
Left Field Printing Group is listed on the Hong Kong stock exchange.
In addition to purchasing Ovato’s book printing business, Opus Group is investing $2.5 million into Ovato as a Convertible Note Subscription Agreement.
As per the deal, the conversion price is $0.14 per share (subject to customary adjustments for dilution), with the Convertible Note bearing no interest. The Note Issue is conditional on completion of the business sale as well as various consents and assignments including ACCC clearance.
As part of this Convertible Note Subscription Agreement, Opus may also require conversion of the Convertible Note into shares at any time prior to 25 November 2023, which is the maturity date of the note.
On conversion of the Convertible Note into shares, Ovato said Opus will hold approximately 14.7 per cent of the issued capital in Ovato assuming there are no changes to the capital structure of Ovato and that Opus does not acquire a relevant interest in any Ovato shares prior to conversion of the Convertible Note.
Ovato mentioned that the funds raised from the sale of its book printing business and the Convertible Note Subscription Agreement will be applied to its general working capital initiatives.
Ovato CEO James Hannan said, “This deal provides a refreshed debt profile and a path towards equity and investment from an experienced and respected industry player.
“Further narrowing of Ovato’s focus will only strengthen our ability to continue to deliver quality and efficiency to our valued clients across our packaging, sheetfed and offset printing businesses.”
This new deal follows Opus Group’s payout of the $4.86 million owed by Ovato to trade financier, Scottish Pacific, and advancement of a further $5 million to Ovato in early April.
That same month, a critical paper shortage was listed as a key cause for Ovato’s decision to immediately close its New Zealand heatset operation, with Hannan adding that supply and demand for Australian heatset production remains aligned.
In February, Ovato recorded a $17.6 million profit in its half year 2021 results, an increase of $27.3 million on the prior corresponding period as it shed its marketing services and magazine distribution businesses.
Ovato currently anticipates both the sale of its book printing business and Note Issue to be completed around 15 June.
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