Australia’s printing business has undergone a dramatic consolidation in the past fortnight, with Geon being placed into receivership by its new owners only to have many of its key assets bought by its competitor Blue Star.
In a torrid two weeks, Geon was placed into administration on 20 February after a request for a $3 million lifeline was rejected by its new private equity owners KKR and Allegro. Administrators PPB Advisory estimated that the group’s debts will amount to around $110 million.
The private equity owners immediately placed a bid for Geon through its vehicle KKRM. The effect of this would have been a re-birthing of Geon only debt free, leaving its creditors to pick up the $110 million tab. Suppliers include smaller printers as well as paper merchants, consumables suppliers and equipment suppliers.
Other industry players were angered by this seemingly murky manoeuvre with Stephen Anstice, CEO of the country’s second biggest print business IPMG, saying: “IPMG is considering instituting a policy where we will not support any suppliers who decide to do business with Geon should it re-emerge under the ownership of KKR and Allegro leaving creditors unpaid.”
Geon’s three major paper suppliers took the matter a step further and immediately ceased all paper supplies to Geon until they had been paid in full all they were owed. Geon was obviously unable to meet this demand and it was forced to face the prospect that they would be closing their doors within the week.
On 4 March, the receivers McGrath Nichol shut Geon’s three Queensland plants with all jobs lost.
Yesterday, Blue Star bought “key assets” in the Sydney and Melbourne sheet fed business. Paper suppliers agreed to immediately lift their blockade and Geon’s former customers were reassured their short-term printing needs would be met. With its acquisition Blue Star is now the largest sheet-fed printing business in the country.
Blue Star has acquired the Banksmeadow print site and Parramatta mailing division in Sydney and the Mt Waverly facility in Melbourne. The value of the deal has not been disclosed. The three sites are believed to generate around $120 million in revenue annually and employ approximately 400 people.
It is understood that Blue Star will operate the three sites in the short term to ensure customer orders are filled, however it said they did not intend to operate the sites in the medium term. While Blue Star has committed to hiring “a meaningful amount” of Geon staff, job losses appear inevitable.
Geon CEO Graham Morgan is among the first names at Geon to join the payroll at Blue Star.