OVATO RESCUE SCHEME APPROVED BY SUPREME COURT
Print giant Ovato has had its scheme to ensure the future of the business approved by the Supreme Court of NSW, with the company now set to receive a $40m cash injection.
Under the scheme its major customer, Australia’s biggest magazine publisher Are Media (formerly Bauer), will become a 22.9 per cent owner of the business, with the Hannan family stake decreasing to 50.7 per cent.
Are is putting up $10m for its stake, while the Hannan family is pumping in an additional $25m. The company will also take on a new $17m secured debt. The company’s net debt will be $37.8m, or $44.6m if it cannot extricate itself from various leases.
Ovato directors including CEO Kevin Slaven and CFO Geoff Stephenson took up their full entitlement under the offer. The Shortfall in shares being taken up from the offering was 7 billion, which was covered by the sub-underwriters – Hannan Family Trust and Are Media.
The new ordinary shares to be issued under the Entitlement Offer will be issued on Christmas Eve, and commence trading next Tuesday, 29 December. The money raised will be used for liquidity, operational matters and to pay off some debt.
Kevin Slaven, CEO and managing director of Ovato, said, “Today’s Court approval is another major milestone to secure the future of our business together with the ongoing employment of hundreds of our people.
“Getting to this point has taken many months of focus, effort, and belief from all our stakeholders. The support of our suppliers, financiers, and staff has been extraordinary. I want to recognise the significant compromises made by all of them, it is with great gratitude and humility that I thank them, along with our customers who have stuck with us through these trying times.
“It is also with great sadness that we say goodbye to many of our work colleagues, particularly at this time of year. We remain committed to doing everything in our power to provide the best level of support that we can in their transition.
“Our new equity and improved balance sheet will allow us to further develop our capabilities in data and bring new products to market that can help the brands and businesses we work with to recover from the impacts of Covid-19 and get back to turning audiences into customers.
“Ultimately, we are now well positioned to evolve our business and place our focus on delivering a tangible difference for the brands that entrust their business with us.”
The new share offer was conditional on the company’s scheme outlined in a 625-page document being agreed by creditors, who had to take a 50 per cent haircut on outstanding invoices, valued at $11.7m. They voted unanimously to support the scheme.
It also involved the end of manufacturing in Victoria, with closure of the Clayton print site and the loss of the 300 jobs there, a quarter of its workforce. Printing from Clayton will move to the Warwick Farm supersite. The heatset presses from Clayton will not be redeployed within the group. The Victoria businesses will now be liquidated.
Ovato says the measures will enable it to make an EBITDA of between $41m and $45m in the current financial year. Last year it lost $109m on sales that slumped by $130m to $593m.