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The Ovato administrator is wasting no time in seeking a sale for the stricken print giant, calling for expressions of interest to be submitted by this Friday, 29 July.

Up for sale: Ovato including the 7 web supersite in Warwick Farm
Up for sale: Ovato including the 7 web supersite in Warwick Farm opened three years ago
Image – Print21

The administrator, FTI Consulting, has said it will then open the data room the next day, Friday 29 July, subject to confidentiality agreements being signed.

It will then request binding offers to be in two weeks later, by Thursday 11 August. FTI is aiming to sell the business as a whole entity, but has also said it is open to offers to parts of it.

Potential buyers for Ovato include rival IVE, as well as part-owner and biggest customer, magazine publisher Are Media's owner Mercury Capital, which also majority owns Blue Star Group in New Zealand. Recent investor, the cash-rich Opus Group owner Hong Kong based Left Field Print Group, cannot be discounted. In addition there will be plenty of private equity funds looking at a business that has long term contracts, and for which they will be able to shed the “legacy cost issues”, code for the existing employment contracts that Ovato cited as one of the primary reasons it became unsustainable.

The first creditors meeting will likely take place next week, although the exact day has not yet been decided.

Ovato now comprises the Australian heatset business with plants in NSW, WA and Qld, a packaging operation based out of Brisbane, a commercial printer in Cairns, and an Auckland based sheetfed business. The Australian business generated sales of $123m in the first half of this year, down by a third on the previous year, the decrease mostly due to the sale of its marketing and distribution businesses, but its heatset activity took a 9 per cent hit. The New Zealand business achieved $33m of revenue, but most of that will have been from the now defunct heatset operation.

Ovato was placed into voluntary administration by the directors on Thursday, following losses that have totalled $430m over the past five years, and despite a restructure 18 months ago that saw $40m injected into the business, a quarter of the 1200 staff made redundant as the company closed its Victorian manufacturing site in Clayton, and suppliers asked to take a 50 per cent cut in outstanding invoices.

Since the restructure the directors have been working non-stop to narrow the business; they sold the former Gordon & Gotch retail distribution business, sold what was the Griffin Press book manufacturing plant in Adelaide, closed the New Zealand heatset operation completely, and spun out all the associated digital and marketing businesses. The company’s Brisbane site was also sold off, although that was owned by the Hannans and not Ovato.

However, all the action ultimately proved unsuccessful, and with both its catalogues business, which is 60 per cent of revenue, and magazines, which is 25 per cent, showing no great signs of improvement, the directors pulled the pin.

First creditors meeting is slated for early August, likely after any binding offers have been received. If no acceptable offers are received the adminstrators will look at the next steps, which include breaking up the company into parts, or liquidation.

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