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Bankers debate shaky Blue Star's future

Troubled print group Blue Star could be headed for administration, according to an Australian media report.

Representatives from Blue Star and its owner, Champ Private Equity, are in serious talks with the company’s banks, The Australian Financial Review said.

Appointing administrators was one option understood as being considered, the paper said.

New Zealand-based Blue Star escaped receivership last August when its mainly Kiwi retail bondholders voted in favour of a controversial funding package and restructure.

The deal saw mainly Kiwi bondholders take a severe haircut on their $105 million face value paper while senior lenders including BNZ, CBA and Bank of Scotland extended their $195 million facility.

However, Blue Star has continued to struggle against tough operating conditions, putting in doubt key milestones needed to meet financial covenants.

In its latest report to bondholders Blue Star indicated it was battling economic headwinds.

“The three months ended March 31, 2012, saw a continuation of the difficult trading conditions that have affected the print industry over the past several years and the business expects these conditions to continue over the balance of the financial year.

"This view is consistent with guidance provided by other industry participants.

“From a covenant compliance perspective, the effect of lower than expected earnings has been partially offset by lower than projected levels of senior debt.”

The latest update follows a disappointing half-year result, which saw Blue Star report a 4.4% drop in total revenue for the six months to December from the previous corresponding period.

Sales revenue for the six months was $280.3 million, $13 million less than 2010’s result for the same period.

The group reported an operating loss of $15.6 million for the half, compared with a loss of $6.3 million in the previous corresponding period.

Blue Star offers commercial printing services in Australia and New Zealand, and employs about 1800 people.

Comments and questions

Someone remind me how much in fees were paid to the banks, Goldmans and First NZ Capital to get the bondholder restructure over the line? What a joke

Put them under and let the Industry get back onto a sound financial footing. The race to be the cheapest in town has not worked.

exactly right.. as soon as you let money men take over running what is essentially a service business based on real customer focus, it becomes a recipe for disaster ..none of those calling the shots would have a clue about what it's like to be at the coalface of the industry, their focus never extending beyond the boardroom..

watching the demise of this outfit has been like death by a thousand cuts.

In the meantime I see that CHAMP has not converted its debt to equity like it promised.

Furthermore, the company has not made any announcement regarding discussions with banks around administration / receivership etc. Surely a breach of the continuous disclosure rules?

Lets face it
The bondholders got done by shady private equity boys
It happens time and time again
When will people learn

I suspect most of the debate will be about which of the banks will fund the administrator/receiver. Last time around BOSI and CBA had zero appetite for further funding - a wise decision in hindsight.

BNZ will no doubt be kicking itself for tipping further money into a corpse that was aready exhibiting partial rigor-mortis at the time of the moratorium vote.

The only winner out of this is that cheshire cat Andrew Barclay, safe in the knowledge his 2011 end of year bonus was paid for by mum and dad bondholders he pressured into voting yes by his junior investment bankers at Goldmans woking the phones leading up to the vote. Congratulations Andrew, you win.

More of the same old story. The same people managing this business at senior and middle management level promoting mediocrity and doing what they have always done, in the same way.

No spark, no talent and a whole lot of internal politics that would make the current Parliament look like a hippie commune. Arrogance and self indulgence have led to this situation, which began the day the Bonds were issued. The same people that were there then are still there now, except that it appears that they have run out of mediocre ideas.

All of the excellent people, who rallied for change have left, and gone on to other things. Maybe they will be back to do what should have been done in the first place. Move the mediocrity out the door.

Another over priced purchase by a bunch of Financial experts doing business on their laptops ,these over priced companies go way back to Eric Watsons and his mates using smoke and mirrors to cook the books up . Good job let a few of them go broke !
A shame some of the brokers havent had to refund the suckers they put in .

Anonymous - you could at least be brave enough to use your actual name.

there you go then dave.

Ok Then

Have you melted down the 12 gold medals you won out of your 30 entries yet?
Perhaps the entry fee might have been better spent in actually paying back some of the money that was coerced out your shareholders.
I hope youre able to walk with your head held high?, how about lunch with your friend Mr Durrans - Onwards & Upwards!!

Good on you Richard, but I think this might be directed at all of us "anonymous". Maybe we should all come clean, especially all of those with generalisations, have such strong opinions and think they know "who should go back". It will be interesting to see if these people can make such a difference. some things I'd agree with though, all those Advisors did really well. As I'm demonstrating, it's really easy to hide behind a hidden name .... like anonymous.

Good on you Richard. Although I think this comment was probably aimed at all those people hiding behind anonymous, just like me. I'd have to agree with some comments, those Advisors certainly made a lot in fees, while the banks pulled the strings and the bondholders were stuffed. But, how about all those generalist comments coming forward, whose going to come back, lets see what difference they are going to make. What have all these people done since leaving? As I am demonstrating, its really easy to hide behind anonymous. Maybe it's time for all of us to come clean.

How about some serious questions being asked of the MED and the awarding of the huge government "cluster" contract to Blue Star last year, when they were more than likely technically (or actually) insolvent. How on earth did they satisfy the financial viability requirement which was an essential part of the tender process?

Actually its the MSD that set up the syndicated group print agreement with Blue Star, not MED.

David Jupe, you talk about being brave enough. I myself will remain anonymous due to the fact that I too worked for one of of the Bluestar companies and I have experienced first hand how swiftly you are dealt to if your opinion differs from that of the select few who are only concerned about themselves rather than the future of the businesses which they are supposed to be managing. I, and others, have witnessed first hand, the bad practices and waste that occures and the fact that the managers of these companies have not been made accountable for years. If you want transparency David, then maybe you should show it yourself. When you do, then I and many others will also do so.

As one of the investors who got screwed in this mess I am more than a little disappointed in the American behind all this Tom Sturgess who gave me personal assurances that they were running a good ship etc etc. Sadly my faith was misplaced

Richard Cranium, do your close associates and family call you Dick Head? Just for Dave Jupes benefit

I wonder if the Blue Star team will be at Pride in Print tonight? Not much to be proud of so maybe a good chance to drown some sorrows. Maybe a good chance for a new award category. "Best small business development."

I agree with Techniche Boy, not much to celebrate at all, unless David is taking a sword along to Pride and Print to fall on? But then I guess accountability within Bluestar has never been a priority.

Might be good if all these anonymous respondents remembered all those guys that jumped ship. Got paid millions. Ahead of bondholders. You should all stand up or look for the re publication of NZX announcement when all you guys took your money and ran. Suggest you all name yourselves and front up. Forget about dick head. We're a good business and employ lots of really good kiwis.

Jumped ship? I don't think so. Most just got sick of watching the Jupe & Jill show

Yeah Right!

As an employee, it is so disheartening to watch all of this happening. We employees have been "thrashed, to an inch of our lives" to keep these companies working and making a dollar. With no incentives or thanks and all the while, having to keep our mouths firmly shut, for fear of the evil overlord.Morale is non-existant. Well the time has come, Philip, for you to open your eyes and sort out that top layer. Actually, it's well overdue. Printing companies cannot be run by people who do not know how to put ink on paper. Number Crunchers have no ability to think outside the square. Bring back leaders who know how to lead.

what about the 1800 employed im one of them that work my a*se off , so you whinging w*nkers can drive a lexus and eat caviar i myself invest in better things so i can continue to enjoy life and not have to complain about everything.

you have been very naughty but thankyou for dealing to all those nice printimg companies got them for a song now how about wage cuts?

What about Romminger. Theres a GM who knows how to look after his own interests. Those who have worked with him know all too well.

Yes an interesting man who finds it difficult to inspire unlike previous managers.

Blue star was a good company. Customers were solid, staff were proud (and boastful) and it performed well across a range of print sectors.

Equity then got involved, balance sheets were reorganised debt was hiked and plans were formulated for an exit IPO at massive premiums for equity shareholders.

Either the Equity investors or the future shareholders (IPO) were going to lose out. It is a some measure of justice that equity got caught in the business before it could offload to unsuspecting private investors who would have been far more exposed than the unfortunate bond holders.

This was always a proposition to make money out of thin air.

This is what happens to a business when selfish people blindly support a trail of incompetent leaders and board members selling vaporware to bondholders, suppliers and staff, all the time knowing their plans would never work.

Sympathy goes to the largely hard working staff who will ultimately be the ones who suffer the most.

Run by greedy selfish management whose only ambition is to to protect their own interests. Fantastic and dedicated staff having their lives dictated to by people who have no care at all. It used to be a privilege to say you work for the company. Sadly no longer.

Please come back Glen C

you screwed us at Nics. paid us the least. stick your family values climo screw you

Agree. His 'family' values were reserved only for people who were completely compliant to his dominance. Scary person, clever bully. But very effective.

So much hatred amazing.