The new multi-currency senior debt facility will reduce PMP’s annual cash interest cost by approximately $7m by ridding PMP of its expensive US Notes. It will also facilitate the installation of four new 64-page presses (two with independent 2×32 page capacity), high speed saddle staplers and trimming and palletising units. However, David Kirk, PMP CEO, says the jury is still out on the future of its sheetfed business.
“PMP is currently not well positioned in the sheetfed market. We either need to sell our sheetfed business and outsource this capacity or radically restructure it: both options are still on the table,” Kirk says.
The company is also planning for a significant upgrade of its Adelaide heatset web and Griffin Press facilities if appropriate arrangements can be secured. Plans for a new greenfields site, a new book press, a small sheetfed book covers press and a relocated higher quality, larger and faster heat set press are included in the overall plan.
All the costs of relocating existing presses and installing new equipment are included in the estimate of $124m capital expense.
Kirk says, “The primary driver for this programme is the needs of our customers. The investments will deliver improved format flexibility, quicker time to market, higher quality, more consistent quality around Australia and more capacity in the faster growing markets of NSW and Queensland.
“We expect to order the equipment very soon and to have virtually all of it installed by the end of the September Quarter 2005, with full contribution from January 2006. Annual earnings benefits will be significant from greater productivity. The programme will deliver on PMP’s objective to be the lowest cost web heatset printer in Australia and to have capacity configured so that we can compete effectively in all sectors of the heatset market”.
Kirk advises that the cost of breaking the US Notes of approximately $12m, together with $8m write off of capitalised costs associated with the previous facility, will be included in PMP’s significant items for the 2004 Financial Year.
“The cost of refinancing will increase our previously advised significant items figure of $18 million to a total of approx. $38 million in 2004”, Kirk says.
Comment below to have your say on this story.
If you have a news story or tip-off, get in touch at email@example.com.
Sign up to the Sprinter newsletter