$179.1m write off for Metro Glass Tech as lenders take over

Building glass manufacturer Metro Glass Tech has written off $179.1 million setting the stage for lenders to take control.

Creditors of the Auckland-based company enforced security held over Metro Glass Tech’s debt, forcing a restructure and transfer of the business to them on January 31, according to an Overseas Investment Offices approval summary published today.

The write-down in the company’s value gave it an enterprise value of $180 million, less than half of the $366.2 million paid by Australian equity firm Catalyst Investment Managers in 2006.

Metro Glass Tech posted a loss of $200.9 million in the 12 months ended March 31, widening the loss of $48 million a year earlier, due to the impairment charge against goodwill, according to holding company NZ Glass Holding’s financial statements lodged with the Companies Office yesterday.

As part of the restructure, the company’s lenders gave up “a large portion of their debt obligations in return for a major equity stake,” directors Trent Peterson and Andrew Bailey said.

As at March 31 last year, Metro Glass Tech had $286.4 million in bank debt coming due in less than a year, and net debt of $280.9 million, which gave it a gearing ratio of 181.8%.

It paid $33.3 million in finance costs in the 2011 financial year, down from $40.1 million in 2010.

The new owners have poured the glass manufacturer into a new holding company called MF (Finco). The group includes Australian private equity firm Crescent Capital, JP Morgan, Germany’s WestLB, Bain Capital’s Sankaty Credit Opportunities fund, among others.

As part of the deal, Metro Glass Tech’s board resigned, through the management team was retrained to operate the business.

Government figures today showed the issuance of the new building consents rose 8.3% last month, primarily off a pick-up in demand for retirement units in Canterbury. 

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Metro Glass is just to expensive and I have found it to have quality issues so I would never have it in any of my properties anymore. GOOD LUCK to the new owners as you will need deep pockets

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Great opportunity for Fletcher Building to acquire (at least an interest in) Metro

A natural fit in their business model that might also assist their ailing Trans Tasman Insulation businesses, and woeful Energy Efficiency DVS business.

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Classic Australian LBO blunder in NZ, although the timing coundn't have been worse.

Good luck competing with chinese glass imports.

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if Metro glass is having problems, does that mean the double glazed glass is selling too cheap in the country? or does that mean there operating cost is too high? can someone in the industry share their comments?

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Operating cost are too high, bad management. Over staffed and under skilled not a good mixture. I've tried them, far too expensive and got a couldn't care less attitude when I raised a quality issue. Not good.

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Operating cost are too high, bad management. Over staffed and under skilled not a good mixture. I've tried them, far too expensive and got a couldn't care less attitude when I raised a quality issue. Not good.

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Their operating cost must be to high as in our area they have 2 more in competition to them and they are both a lot cheaper

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MetroTech have great systems, a good installation network. I am led to believe their opex are okay.

However, the building industry is at less than half capacity than in 2005-2007, signs are improving, but not much growth this year. (refer to BNZ industry forecasts)

Similarly their retrofit market is slow, in another 2 to 3 years, it will be far stronger.

Better to look at the value of the business, the Investment bankers simply got their values/timing wrong.

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if their opex is high, and they are making a loss, that means, they know that their pricing is not competitive and therefore selling it "cheap".

I am surprised if their opex is high if the technology used to make double glazed windows is not new. Maybe their initial capex is high and they borrow at a higher capital cost and they are suffering from their interest payment.

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Their product is at the top end of teh market in terms of both Quality and performance.

Unfortunately, given the economic climate, a lot of consumers do not look at top quality and performance, and are going for inferior cheap double glazing.

Just because its double glazing, does not mean it will work. The NZ Standards are wide enough to drive a truck through, or for that matter, almost any cheap chinese knockoff labelled as double glazing.

Caveat emptor -

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Anonymous11,

I thought double glazing type is plenty standard. Either vacuum inbetween or some inert gas. Are you saying that there is a difference in the manufacturing technique and the glass that makes a difference?

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The only variations are in the higher specified glass between the different Companies and very few customers use it due to the cost. Standard annealed 4/4 DG's are the same for all pretty much. Their volume is to low to allow cheaper pricing + we quote against their retrofitting and beat their price every time so again to expensive

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Metro were fine until they were lumbered with debt when the original owners sold out several years back. The owners got circ $300M, and the buyers probably did not understand how the changing market would react to the introduction of double glazing as "standard" on all new residential construction.

all history, without the debt and the heavy interest bill Metro would have been fine, albeit tough with construction market halving from 2006 levels till now.

Not all double glazing is created equal, many many variables. Type of glass, coatings and thickness, the gap between the two panes of glass (bigger = better in general), the fill between the glass (dry air, or argon gas), the spacers between the two bits of glass (aluminium great conductor of heat, not good: OR stainless composites poor conductor of heat and good), there are also foam spacers, again better than aluminium.

There are good standards promoted by the Industry Associations, WANZ Window Association of New Zealand, and IGUMA Insulating Glass Unit Manufacturers Association. Product does come in from Asia, and there are always doubts about its quality.

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As a Double Glazing Manufacturer we think some of these annon comments are harsh.
Metro has good products and being a member of the IGUMA and WANZ we are all tested to the standards EN1279 which includeds stringent Branz testing and audits of our systems. Unlike imported cheap units that don't comply with this standard. We would advise Builders and the public to check what they are buying warranty issues and durability are inportant to our product.

We must support our locally made products, Metro's problems are a sign of the times.

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As a customer from Central Otago, we replaced a house lot of 20 year old AL windows and installed newly constructed windows and doors with Metro Tech Glass - low e, argon filled and some safety / poly laminated units. Used their glass in both shower areas as well. Very satisfied with the results thanks.

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Classic case of incompetent management. MetroGlassTech do not have a business strategy, they simply throw resource at the business without research or effective sales, in the hope that it comes knocking at the door. The christchurch earthquake is a classic example. Another Glazing company with a dynamic attitude would put the final nail in the coffin. Veridian should be rubbing there hands....

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I agree, Christchurch in particular....too much dead wood, that don't care about the business or customers, these results were inevitable.....

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I agree, Christchurch in particular....too much dead wood, that don't care about the business or customers, these results were inevitable.....

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I just want to share my view..I had my windows retroffited about 18 months ago, the serice I recieved from the retrofit team at the Christchurch branch was second to none..I would use them again and have recommended to friends since...Very happy...

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I had a representative from the CHCH branch look at some showers I needed. If that is how they conduct sales and deal with potential customers, well i wonder how many millions they lose this year. I had to chase up my quote and the details!!! Needless to say a competitor got the business. They obviously don't need new customers

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