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Blue Star backers commit more capital to company

Friday, 27 February 2009
By Print 21 Online Article

Major shareholders reaffirm support in interim report for the trans-Tasman printer as it battles increasingly challenging business conditions.

Dismissing suggestion that Blue Star is in trouble, Chris Mitchell, (pictured) managing director, says the actions the company is taking, “are what a prudent company should be doing in today’s challenging environment.

“Blue Star is in a sound financial position. It is profitable; it has positive cash flow. Moreover, our major shareholders have committed capital to the company. This equity support not only underpins our financial position, it also aims to ensure the continued excellent relationship Blue Star enjoys with its lenders is maintained,” he said.

He downplayed the possibility of suspending interest payments on the company’s NZ capital bonds as reported yesterday by Print21. “A specifically designed feature of these bonds is the ability to suspend interest payments. If such an action were ever to be taken it would not be dissimilar to the recent announcements by many businesses to reduce dividend payments in order to conserve cash. I should point out that in such an eventuality, interest on our bonds would continue to accrue at a higher rate.”

He describes the ongoing reorganisation of the group’s operating assets as reinforcing “its financial and competitive position, while also enhancing the levels of our customer service.”

In his report, he notes that the sheetfed business has suffered the most from the current downturn, while the web, particularly Webstar Australia, and the Australian mailing businesses continue to perform strongly. In response the company has begun to optimize its sheetfed cost base, in such recent moves as closing the McMillan Printing business in Sydney and restructuring the Pirion Printing operations in Canberra.

The company anticipates a continuation of the current economic conditions for at least the next 12 months with consequent impacts on ongoing print spend and margin. However, it claims to be well positioned to continue expansion of its Australasian print management business without having to commit further major capital on print equipment.

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