Ovato creditors all agree to company restructure
Creditors at print giant Ovato have unanimously agreed to support the company’s restructuring plan, which will see unsecured creditors take a 50 per cent haircut on outstanding invoices, the company closing its Victoria print operation, and receiving a $40m cash injection.
Subject to the successful completion of “certain other restructuring initiatives”, Ovato will proceed to the second hearing in the Supreme Court of NSW currently scheduled for 18 December, seeking orders that the creditors’ scheme of arrangement and member’s schemes of arrangement be approved.
Ovato CEO Kevin Slaven said: “The vote is the next key milestone on the path towards implementation of the restructure and recapitalisation of the business, involving a capital injection of up to $40m, 300 redundancies and the closure of the Ovato printing plant at Clayton in Melbourne.”
Shares in Ovato remain suspended until December 29 on the company’s request, their value plunged by 85 per cent to $0.0023c when the court granted approval for the company to take its scheme to creditors.
The cash injection will come through a $40m rights issue underwritten by the Hannan family and major customer, magazine publisher Are Media (formerly Bauer), who will between them guarantee at least $35m is pumped into the business. It will be used for liquidity, to pay down debt, and for operational matters.
Ovato lost $109m in the last financial year as sales plunged by 41 per cent in the Covid period, with revenue down by $130m to $593m.Pre-Covid sales were down by 9 per cent.
The company had said if its restructuring plan does not succeed the company faces an “unpalatable outcome”, with the jobs of its remaining 900-strong workforce on the line.
The main printing equipment from Clayton, including the manroland Lithoman presses, will not be redeployed within the group. All printing from Clayton will be transferred to Warwick Farm. The company made the decision to cease manufacturing in Victoria as the lease on its Clayton site was up, leaving it with the choice of either starting a new greenfield site, or switching the print to the new supersite in Warwick Farm, which in the current circumstances has the capacity.