PMP has convinced self-managed super fund specialist Fixed Income Investment Group (FIIG) it’s good for a loan to the tune of a $40 million corporate bond, despite reporting net losses for the past three years.
Unsecured corporate bonds are often regarded as a higher risk investment for superannuation savings but Mark Paton, CEO, FIIG Securities, is confident PMP will make good its plan to fully repay all finance and emerge debt-free in four years.
“PMP has been working for three years to restructure the business for improved future profitability. Despite reporting statutory loss, it has remained cash profitable through restructuring period, and seen a drop in total debt from $600 million to around $100 million,” said Paton.
- Peter George, CEO, PMP
“They approached us to put long-term funding in place, and manage their position in the medium term, by refinancing some of that debt with the bond.”
The print and distribution titan recorded a net loss of $-69.7 million in the financial year ending 2013, and a drop in annual operating revenue of $-118.8 million for the same period, but despite these results FIIG Securities were satisfied that PMP’s process of restructuring and downsizing was complete and that the company’s prospects were strong.
The $40 million bond is a bid to gain a 12-month extension of its existing bank facility up to September 2015. The bond will be issued with a 4-year maturation and an indicative coupon of 8.75% per annum.
Peter George, CEO, PMP, said, “PMP is embarking on this bond offering to access longer term debt funding through the corporate bond market to diversify PMP’s funding sources.”
PMP’s transition towards a leaner operating structure has seen the business emphasise demand in direct mail and catalogue production. George told Print21 that growth in catalogue frequency and volumes would underpin demand for PMP products and services. FIIG Securities cites the upturn in the catalogue business and PMP’s long-term relationships with a number of blue-chip clients as helping to inform their decision to arrange the bond.
As part of this ongoing transition, 2013 also saw the loss of 120 jobs in the closure of PMP’s Chullora site.
FIIG Securities reports its confidence in PMP’s future projections, and confirms that investor response to the bond has so far been positive.