HK printer to own 61 per cent of Opus

Hong Kong printer 1010 Printing Group will completely bail out Opus Group’s more than $51m debts in exchange for a controlling share of the business.

Under the debt restructure and recapitalisation deal, 1010 will own 61 per cent of the troubled Australian printer and install its executive director Chuk Kin ‘CK’ Lau onto the Opus board.

Lau’s company will convert the $51m debt it bought from the Commonwealth Bank for $20m in July into $20.9m of equity and an $8m placement at 35c a share (compared to the 4.9c market price when the deal was announced).

[Related: The ups and downs of Opus]

The debt forgiveness by 1010 means the only debts Opus will still have are a $1.9m unsecured promissory note owed to CBA, due by July 31 2015, $2.6m in finance leases, and a working capital facility of $3.5m that was used to fund the recent restructure.

It is not yet known what strings 1010 has attached to the deal, or how much control it will exercise over the company it now owns, but deep cost cuts are certain to be on the horizon with Opus’ financial report saying its next step is to reduce its cost base, and that ‘efficiency gains will be achieved through rationalisation’.

Staff will likely bear the brunt of this, with up to 70 jobs to be cut in a $3.5m downsize.

Opus is also seeking to recapitalise through smaller shareholders, offering $1.05m in new shares to existing investors, and raising $4m from professional investors managed by Wilson HTM Corporate Finance. Opus executive director Richard Celarc is chipping in a further $3m himself.

[Related: More credit and debt news]

After the 1-for-10 share consolidation, the restructured company will have a market capitalisation of $34.2m with 97.8 million shares, compared to the current $5m.

Opus shares jumped 0.6c to 5.5c following the debt restructure announcement.

The company announced a $42.3m pre-tax loss in last week’s annual report, thanks to a $38.1m goodwill write-down of its Australian publishing assets.

Comment below to have your say on this story.

If you have a news story or tip-off, get in touch at editorial@sprinter.com.au.  

Sign up to the Sprinter newsletter

Leave a comment:

Your email address will not be published. All fields are required

Advertisement

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from our team.
Advertisement