Bankers bail out printing firm

Geon Group chairman Sandy Maier confirmed the company has struck a deal with its bankers. Photo / Simon Baker

One of New Zealand's largest printing companies has been bailed out by its bankers, six years after being bought by an Australian private equity firm.

Geon Group, which employs 390 people in New Zealand, was in danger of collapse before its bankers agreed to a major restructuring last month, according to accounts filed in Australia.

The company, which used to be known as Pacific Print, operates on both sides of the Tasman. It was tipped for a sharemarket float in 2005, but was sold instead to Gresham Private Equity.

Gresham initially bought a half-share in the company, in a deal valuing the firm at $220 million, and later moved to full ownership.

Since then it has pursued aggressive growth, particularly in Australia. It changed its name to Geon in 2007, and last May shifted its headquarters from New Zealand to Australia.

But according to its latest accounts, its bankers now control the company after it accumulated losses of more than A$271 million ($370 million).

At the end of June last year, the company had negative equity of A$216 million, and a note from its auditors stated there was "material uncertainty" as to whether the company would be able to continue as a going concern.

Chairman Sandy Maier confirmed yesterday the company had last month struck a deal with its bankers, BOS International, which reduced its debt from A$244 million to A$80 million.

Its loans have been extended to June 2015, and the company has been given a reprieve on its interest payments until June next year. Until then, it is paying interest on a "pay if you can" basis. It has also been given an additional working capital facility of A$12 million ($16 million).

In return, its bankers have an "exit participation deed" which allow them a share of the profits if the company is sold.

The company has welcomed the deal, and claims it is now ready "for its next significant growth stage".

According to its website, Geon is Australasia's leading commercial printer, with more than 1250 staff on both sides of the Tasman. Around one-third of its operations are in New Zealand, with branches in Auckland, Tauranga, Hamilton, Napier, Palmerston North, New Plymouth, Wellington and Christchurch.

Its Sydney-based chief executive, Graham Morgan, yesterday acknowledged business conditions continued to be "challenging for everybody". Despite that, the company had experienced "significant growth" in sales, he said, and was continuing to invest in new technology.

Gresham's only other investment in New Zealand is the Noel Leeming Group, which BOS International also helped fund.

The group, which includes the Bond & Bond retail chain, reported a net loss of $2.7 million in the year to March 2010 - an improvement on its $4.4 million loss the previous year.

According to those accounts, the group is due to repay around $75 million of loans to BOS International in June this year.