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Private equity firm moves in on Geon

22 Feb 2013 THE AGE - LUCY BATTERSBY



PRIVATE equity firm Kohlberg Kravis Roberts is attempting a US-style bankruptcy on Melbourne-based commercial printing company Geon Group.

Along with its Australian partners, Allegro Funds, KKR offered to buy parts of Geon Group from receivers on the same day it appointed receivers, which it was entitled to do as the major creditor.

Meanwhile hundreds of staff at the company's printing plants in Melbourne and New Zealand have been told the company would keep operating as normal. Geon prints catalogues and brochures, and co-ordinates mail campaigns and creative work. KKR and Allegro purchased Geon from Gresham on February 8 for an undisclosed "small" sum. Last year KKR and Allegro became major creditors when they purchased a portfolio of distressed debt from Lloyds International, which included an $80 million loan to Gresham dating back to 2007.

On Wednesday, Geon Group's directors, Sandy Maier and Jack Crumlin, appointed PPB Advisory voluntary administrators and KKR appointed McGrathNicol receivers. KKR also offered to buy some or all of Geon Group from McGrathNicol. The process gives KKR and Allegro the chance to cherry-pick assets.

In a memo to staff Geon's chief executive, Graham Morgan, said the manoeuvring was a "complex" but necessary step.

"As long-term believers in this business, [KKR] has informed me that if their offer is acceptable to McGrathNicol that they will commit substantial resources to make Geon successful, including the availability of additional capital and significant senior operational and financial resources," he said.

Placing the company into voluntary administration freezes all debts and legal action. Receiver McGrathNicol has taken control of the company's assets and said it was liaising with employees, unions, customers and suppliers.