The former owners of Blue Star Group have swallowed a $173 million goodwill write-off and do not look to be getting much from the sale of assets as the Australasian printing company is broken up.
But the future of New Zealand's largest commercial printer has been secured with the sale of the business to Australian private equity firm Mercury Capital and its former owner, Nelson-based businessman Tom Sturgess.
He sold 84 percent of the group to offshore investors Champ Private Equity in 2006 for $385 million, but retained a minority holding worth about $15 million.
At the time Champ, which has offices in Australia and Singapore, talked up its first investment in New Zealand, saying Blue Star had leading market positions, experienced management, an excellent reputation and a long-term contracted revenue base.
Seven years later, the accounts filed to the Companies Office are grim reading, with a $173 million write-off of goodwill helping produce a $215.9 million loss for the year to June 30, 2012. The loss was $291 million away from a forecast profit in a prospectus for capital bonds issued in July 2011.
Of total revenue of $569.7 million, $148 million came from the New Zealand print business and $259.7 million from the Australian print operation.
The accounts were prepared on a realisation basis. The Rapid Labels unit was sold on July 6 and the accounts disclose net proceeds of $21 million.
The sale of the Australian business netted $17.6 million.
The New Zealand business, comprising Print New Zealand and Webstar New Zealand, fetched a net $18 million, but the actual sale price is believed to have been higher.
The accounts say that many of the other subsidiaries will be liquidated in the near future.
Champ, a pioneer in private equity investing, declined to comment on the extent of its losses on the investment.
Mr Sturgess says he is seeking to re-establish a stable operating environment for the company.
The New Zealand management team had held a company with a couple of hundred millions dollars of revenue and several hundred employees together in a difficult operating environment as the parent went through its processes.
"We're looking forward to getting behind this team with a recapitalised and appropriate balance sheet for the business in the environment in which it finds itself," he told BusinessDesk.
He says he has worked before with companies in mature markets and he is not particularly enamoured with growth for growth's sake as a strategy.
"I'm very focused on realising the opportunities that are in front of us as the participants within industries rearrange themselves."
In the meantime, there are no plans for job losses or plant closures.