The trans-Tasman group’s chief financial officer, Ashley Fenton, told ProPrint that Geon had “reached an agreement with our financier [Bank of Scotland] that sees a recognition of the long-term dynamics of our industry, where we are at, what is happening and resets our debt appropriately”.
According to information released last March, Geon negotiated a debt package of A$243.5m and NZ$41.2m on 9 November 2009, with a maturity date of May 2013.
This date has now been extended to 30 June 2015, though Fenton would not go into “the nitty gritty” of the restructure. He did stress it was “not a debt-for-equity swap”.
“We have issued no equity to our financier. It is certainly not a position where our ownership has changed.”
However, he said that “in terms of future potential [equity] upside, that is a slightly different discussion”.
“If there was a future value-creation event, then it would be appropriate that the parties might look at that as some kind of resolution,” said Fenton.
It follows full-year results from Wesfarmers, which owns Geon’s private-equity backers, Gresham, showing that the PE company recorded a net loss of $28m for the half year to 31 December 2010.
The restructure at Geon marks the second major financial reshuffle in just over a year.
Fenton admitted that beyond financial restructuring, “the business has got to perform”.
“Our key focus is on growing the business. Having a solid platform underneath you certainly engenders good confidence for us to be able to do that.
“Clearly a reduced debt obligation helps in terms of a lowered interest burden on the business, which will assist in the bottom-line profits going forward,” said Fenton.
“What we have concluded here is something that reflects where we are operating and what our expectations are. Trading has significantly improved since last year and we are conformable with where we are operating at and what that will mean in terms of our debt-servicing ability going forward.”
In a statement, chief executive Graham Morgan said the most recent three quarters had delivered year-on-year growth, though Fenton pointed out that these three quarters would not be covered in its full-year results for the 2010 year, due to be released in the near future.
Morgan said: “We are very pleased to have finalised the restructuring package. Geon is now in the best possible position to be driving the business forward to the next stage of its development. We are extremely fortunate to have such strong support of our business and its strategy from our board, Gresham and our financiers.”
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