GEON’s long-running saga comes to a bitter end, with the embattled print giant finally entering administration after years of financial difficulties and deepening debt.
GEON Group is now in the hands of administrator and receiver, McGrath Nicol deciding the fate of the company’s 1200 workers in Australia and New Zealand.
The receivers were called in yesterday afternoon at the insistence of the new owners, US private equity firm Kohlberg Kravis Roberts (KKR), who took control from Gresham PE last week. The US-based investor fund has dropped the company like a hot potato.
Although local advisory firm, PPB Advisory, was initially appointed as GEON’s administrator, the fate of the company is now in the hands of McGrath Nicol, at the request of KKR and Allegro Funds. McGrath Nicol is embarking on a sales process for the group.
“We have already commenced a sale process for GEON’s businesses and assets and have received an expression of interest from one party and held discussions with others,” says Shaun Fraser, one of McGrath Nicol’s four appointed GEON receivers and managers. “We have begun the process of stabilising GEON’s operations with the support of key stakeholders, including GEON equity holders KKR and Allegro [KKRM]. This will facilitate a thorough assessment of each of GEON’s business units’ financial position.”
Although the print group is riddled with debt, it possesses one of the country’s richest collections of state-of-the-art print equipment and, with McGrath Nicol already embarking on a sales process for the company, some of Australia’s other big industry names have been mentioned as potential suitors – with industry sources naming Blue Star as one of the interested parties.
Another option on the table for GEON’s future is that KKR with Allegro [KKRM] buy back the printing group. According to latest reports, KKRM has already submitted an offer for the business, in what some commentators are calling a possible 'phoenix' manoeuvre.
The sudden end comes after six years of private equity engagement that saw the company shrink dramatically from an estimated $350 million to where it was passed to its current owners earlier this month for practically nothing.
KKR and Australian private equity firm, Allegro Funds, took on ownership of GEON earlier this month from Lloyds Banking Group as part of a distressed loan portfolio worth $350 million. According to reports, they paid less than $5 million for the company, and held the right to receive an $80 loan from it in 2015.
Although the size of the print group’s outstanding debt has not yet been made public, it is clear that it will heavily impact a large number of print industry suppliers in the local market.
2012 was a tumultuous year for GEON, with the print group losing several of its most prominent employees, including New Zealand executive general manager, Andrew Durrans, head of operations, Roger Kirwan, eastern seaboard general manager, Glen Draper, Scott Thompson, chief operating officer, and NSW head of sales, Kim Lykissas, among others – many of whom have taken up positions with competing companies like Blue Star and OPUS Group.
The company copped industry backlash in September 2012 when it moved to slice its labour costs, entering talks with employees with the aim of minimising its outgoing staffing expenses while endeavouring to keep staff numbers steady. Since then, however, the company has seen a long line of employees walk out.
Update: dateline – 15:58 February 21
Shaun Fraser, Jason Preston, Murray Smith and James Thackray of McGrathNicol have been appointed Receivers and Managers (“Receivers”) of GEON Australia Pty Ltd and related entities by a secured creditor.
This appointment occurred after the Directors of GEON appointed PPB Advisory as Voluntary Administrators. Control of GEON’s businesses and assets now rests with the Receivers.
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