Private equity firm moves in on Geon
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.
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Private equity firm Kohlberg Kravis Roberts (KKR), with Australian partner Allegro Funds, moved on Melbourne-based commercial printer Geon Group by appointing receivers and offering to buy parts of the business. Geon’s directors also placed the company into voluntary administration, which has frozen debts and legal action while receivers take control of assets.
The main parties mentioned are private equity firms KKR and Allegro Funds, former owner Gresham, and Lloyds International (which sold distressed debt). Advisers and insolvency practitioners involved are PPB Advisory (voluntary administrators) and McGrathNicol (receivers).
According to the report, placing Geon into voluntary administration freezes all debts and legal action. At the same time, the appointed receiver McGrathNicol has taken control of the company’s assets to assess options and liaise with stakeholders.
The article says hundreds of staff at Geon’s printing plants in Melbourne and New Zealand were told the company would continue operating as normal. The receiver is liaising with employees, unions, customers and suppliers while the process unfolds.
KKR and Allegro offered to buy some or all of Geon from the receivers on the same day KKR appointed receivers. The process gives them the chance to cherry-pick assets, and KKR has indicated it may commit additional capital and operational resources if its offer is acceptable to the receiver.
They became major creditors after purchasing a portfolio of distressed debt from Lloyds International, which included an $80 million loan to Gresham dating back to 2007. KKR and Allegro also purchased Geon from Gresham on February 8 for an undisclosed 'small' sum.
The situation highlights how private equity can use creditor positions and distressed-debt purchases to acquire or restructure companies. For investors, it’s a reminder to watch creditor-led restructures, as they can result in asset sales, continued operations under new ownership, or job and contract uncertainty for a period.
Monitor updates from the receivers (McGrathNicol) and voluntary administrators (PPB Advisory), any formal sale process or offers by KKR/Allegro, communications to employees and customers, and administrator reports — these will indicate whether Geon’s assets are sold, operations continue, or a different outcome emerges.
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