Two Extraordinary General Meetings will soon take place as Ovato seeks shareholder approval to sell its retail distribution businesses in Australia and New Zealand and marketing divisions for $24 million combined to Are Media and the Hannan family respectively.
The first EGM on July 15 will deal with the sale of the Ovato Retail Distribution businesses in Australia and New Zealand to magazine publisher and 16.4 per cent Ovato shareholder, Are Media, for $15 million with the deal also including negative working capital of $27 million.
Are Media, formerly Bauer Media, was purchased by private equity firm, Mercury Capital, last year.
The Hannan family currently holds a 43.29 per cent interest in Ovato.
The second EGM, on July 29, will seek shareholder approval to sell a suite of Ovato marketing services businesses – Ovato Creative Services, Ovato Technology, Ovato Communications, Ovato Creative Services Clayton and Pacific Intermedia Pty Ltd – to Hannan family business, Ballygriffin Holdings Pty Ltd, for $9 million.
Both EGMs will also ask shareholders to consider increasing security increases from $2.3 million to $4.8 million.
Back to print
Ovato has made its intentions of returning to being a more print-focused business clear with this strategy resulting in the departure of a number of senior executives including CEO Kevin Slaven and publishing lead Craig Dunsford.
Former Ovato Chief Operating Officer, James Hannan, has now stepped into Slaven’s shoes as CEO of the business.
In documents filed with the Australian Securities Exchange, Ovato’s Non-Interested Directors have indicated they believe the sale of the shares in the marketing businesses is in the best interests of the company as the:
“Share Sale Transaction will ensure that the Company’s corporate group is able to continue to operate as a going concern and will provide funds for general working capital purposes”.
The Non-Interested Directors also say, “The Company has made a strategic decision to focus on its core business, being the printing business.”
The announcement of the proposed business sales come as Ovato continues its restructure which was announced last year and approved by the NSW Supreme Court.
Restructure, recapitalisation plan
Ovato began a complex NSW Supreme Court-approved restructure and recapitalisation scheme at the end of last year that resulted in the closure of its production site in Melbourne’s Clayton and the loss of 300 positions across the company.
The 28,000-square metre factory in Brisbane which currently houses Ovato’s Queensland operations and is owned by Hannan family business, Rathdrum Property Trust, was also recently put on the market. Ovato’s lease on this site expires on June 30, 2024.
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