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Blue Star talks to lenders
Blue Star may be in the running for administration proceedings with the trans-Tasman print and communications group reportedly in talks with owner, CHAMP Private Equity, and its lenders about its finances.
According to an article that appeared this week in the Australian Financial Review, it is understood the company has been in touch with its banks, including Bank of New Zealand, Commonwealth Bank of Australia and Bank of Scotland. The article suggests one of the options on the table for the struggling business is the appointment of an administrator.
Blue Star has been operating amid difficult trading conditions in a highly competitive industry landscape over the past few years, a factor which saw the company refinance its debts less than a year ago.
However, with group’s first quarter results for 2012 indicating a continued decline in sales, and its total revenue dropping by 4.4 per cent from the previous year’s results for the six months ending FY2011, the company has continued to struggle since the refinancing.
The company’s financial results for the six months ending 2011 indicated that, despite the difficult market conditions which saw the company’s operating loss for the half-year balloon from the previous year’s $6.3 million to $15.6 million, Blue Star’s earnings before interest and taxes (EBITDA) of $20.7 million were only marginally lower than the previous year’s $24.9 million.
In a bid to stem its operational losses and buoy its overall profits, Blue Star said it would continue to implement a number of initiatives to improve its financial performance, including reducing inventory holdings, further restructuring, and the realignment of capital expenditure.
CHAMP acquired Blue Star for $NZ385 million in December 2006.
June 29, 2012 at 6:53 am,
Time to let this dog go…. for far too long the banks have been propping up Bluestar and Geon, to the detriment of the industry, who by and large are properly run focussed companies, who know what margin is and what it means to the bottom line.
The strategies of rationalisation and undercutting in an attempt to own the market, thus control the market, were flawed back in the late 90′s when t started and are shown up to be fatally flawed today.