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Blue Star delists almost worthless bonds to 'protect' sale

Blue Star Group’s near worthless bonds are to be delisted from the NZDX market as the printing group seeks to avoid public notification of its annual results to “protect the integrity” of efforts to sell the business.

The debt will be delisted at the end of trading on Aug. 28, removing the NZX reporting requirement to release its results for the year ended June 30. Last month the Champ Private Equity-controlled company hired Goldman Sachs to advise on a sale after receiving unsolicited approaches.

“The delisting follows an application by Blue Star, which sought to protect the integrity of its current sale process by deferring the preliminary announcement of its consolidated 30 June results and annual report,” according to a statement from managing director Phillip Bower.

Once delisted, the bonds “may still be traded privately and Blue Star remains under the regulatory oversight of Perpetual Trust, the trustee for the bonds, the Financial Markets Authority and the Registrar of Companies,” Bower said.

The bonds trade infrequently and were last at a price of 0.5 cents per $1 face amount on the NZDX. There is $67.5 million of the debt outstanding.

“The listed bonds are now trading effectively at nominal value, infrequently and on very low volumes,” Bower said. “The board now considers it unlikely that any value will attach to the group’s NZDX listed bonds.”

Sydney-based Champ bought its controlling 84 percent stake in Blue Star in 2006 from interests associated with then-managing director Tom Sturgess at a price based on an enterprise value of $385 million.

The company last month said senior lenders had agreed to maintain their support during the sales process. Blue Star last year convinced bond holders to roll over $105 million of NZDX-listed bonds, extending the term and providing more financial covenant headroom. The new bonds, which mature in September 2015, last traded at 1.2 cents per $1 face amount.

Separately, Blue Star said funds associated with Champ had fulfilled their commitment to transfer their shareholder subordinated funding totalling $14.8 million into ordinary shares of Blue Star.

More by Jonathan Underhill

Comments and questions

... and there you go.

The delisting has more to do with avoiding transparency to interested stakeholders. It is probably also about saving face and avoiding the embarassment of the numbers (which dont lie, exaggerate or provide false hope).

Are BS saying they dont want potential buyers to see the numbers? Are they wanting to avoid the strict reporting structure of the market?

They say they want to "protect the integrity" of the sale process. How does delisting achieve that, exactly?

Of course the answer is obvious! Transparency is not good for customers or suppliers or staff members (forget bondholders already).

I presume its because they will need to 'fair value' the assets under IFRS accounting rules, which would give away to potential buyers what their price expectations are (because they would need to impair the goodwill down to those levels). They still have to provide the accounts in due course, as they are of course an 'Issuer' under the Financial Reporting Act.

Why they didn't impair the goodwill down to 'fair value' at the time of the bondholder meeting is beyond me. I suspect bondholders would have a case against the directors and KPMG as those numbers have turned out to be delusional.

More slight of hand by the corporate world,straight out of the Key camp.

Whats a former FOREX trader got to do with this?? Private Equity & FOREX are worlds apart
You dont happen to be Union hack Mike Williams by chance?

Do you guys know that
1. This isn't a political platform
2. Most people here will not be influenced by your comments
3. You don't know what you are talking about
Maybe go to a Greens Conference and reinforce your views there.

I must admit to laughing out loud at the 'reassuring' comment that Blue Star "remains under the regulatory oversight of Perpetual Trust". Given what those guys have been up to lately that is (ice) cold comfort ...

This is merely more efforts to avoid continuous disclosure. In order to "protect the integrity" of the sale process they have also had to seek the comfort of the banks, formally assure the paper companies to continue supply and now this.

It is purely and simply designed to ensure that for as long as possible, potential buyers are dealing with Goldman Sachs and the company and not the administrator, where the sale price will be completely different. Watch the original sellers circle to reclaim what was originally theirs at a minuscule of what they sold it for. With that in mind they await the arrival of the Administrator.

Unfortunately, the new CEO is beginning to look like the Emperor with new clothes.

The delisting was requested by two of the potential purchasers, to defer spotlight by media & other vultures, from their "close to home" dealings...
Watch for an upset in the industry for sure!

What does that mean?

Yes, exactly what does this mean? I am sure people like Kalamazoo/Wickliffe don't care what people think about how they purchase businesses. Big like Blue Star or small like Print Council.

Purchase? They don't pay anything for these businesses, they take over what liability and/or assets that suit them best and let the unsecured creditors fend for themselves, maybe not previously, but certainly now, ask Print Council's unsecured creditors...... Business as usual Brooke?? I think not!

Desparate last throw of the dice. Hold back the group financial results and hurry to get some of the assets sold.

OMG. Matt (Fatty) Aitken will have to find a new source of pies!

make your gutless personal attacks directly - i am a small trade supplier and this issue is about getting paid for me. if bluestar sell their business assets to someone else at today's price, which is far below what is owed to banks etc then what ability has blue star to pay their liabilities for goods supplied before the sale?

I was also a supplier to this company and the writing was clearly on the wall a year ago. If you are still deep into this company then you only have yourself to blame. When the company publicly declares that bond holders accept the deal or we go receivership tomorrow what more do you need to know the race is over. Fool me once, shame on you. Fool me twice shame on me.

A totally irrelevant gutless comment that should not take up space here. Has nothing to do with the issues facing traders, suppliers and investors.

Go easy on the traders and suppliers who have been caught. Yes the writing was on the wall, but BS management have been very active with the "business as usual" talk.

Small traders are doing the work, they dont have time to look at balance sheets and read the press releases. I know one small trader that had no idea that there was any bond holder vote or that there were any issues now (until I told him).

From Proprint:

Face it - there is absolutely no defence for the management of Blue Star. They had a plan and it failed badly and cost a lot of people a lot of money. They are exiting the industry in a way unprecedented in print, and let's face it that there have been some shockers who exited our game. And now they won't even be held accountable for it on paper.

***Epic fail***