Blue Star responds to rumours of administration

Chief executive Phillip Bower told ProPrint this morning that speculation in yesterday’s Australian Financial Review was unfounded and that the paper hadn’t contacted Blue Star for its story.

The AFR reported that Blue Star’s fate “hangs in the balance” and that representatives from Blue Star and its owner, Champ Private Equity, were “in serious talks with the company’s banks… It’s understood one of the options being considered is appointing an administrator.”

The article appeared in the Street Talk, a section of the AFR dedicated to market gossip and speculation, such as the February 2011 rumour that Blue Star was set to acquire Geon.

However, it is believed that the article was right about Blue Star being in talks with its banks. 

Following yesterday’s AFR article, several industry figures told ProPrint that Blue Star was in crisis meetings that involved a forensic accountant, believed to be KordaMentha.

However, this morning a source close to the group said it was very unlikely Blue Star was about to file for administration and that there was nothing untoward about KordaMentha being involved as the firm had advised Blue Star during last year’s debt restructure.

Champ associate director Joel Thickins told ProPrint he couldn’t comment.

ProPrint was unable to reach KordaMentha for a comment.

Blue Star’s financial difficulties are well documented. Last year, the group managed to restructure its finances following a drawn-out negotiation involving its bondholders, its lender and private equity owner Champ. Blue Star’s forecast of a 26.5% rise in year-on-year earnings helped secure bondholder support.

However, Blue Star has since conceded it is unlikely to reach this target.

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