Bankers debate shaky Blue Star's future
"Watching the demise of this outfit has been like death by a thousand cuts."Featured comment
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.