Geon's paper supply is looking increasingly difficult, with two the big three merchants ceasing supply, and the third considering its position, with the merchants mindful not only of the cash they are owed, but also industry reaction to their decisions.
Two of the big three, BJ Ball and KW Doggett have said they are cutting supplies as from now, with the third, Spicers, waiting on developments
Paper merchant BJ Ball is the biggest supplier to Geon, and has already stopped supplying them.
BJ Ball's managing director Craig Brown says, "We are surprised and disappointed given the earlier announcements and dialogue with Geon.
"Currently we have elected not supply Geon under receivership and our position is clear, as always we will only supply on the basis that all amounts owing are paid in full.
"This is difficult time for the Geon staff who I believe are as surprised as we are”.
Our sources indicate that BJ Ball has written to Geon’s receivers to remind them that while reserving judgment on Geon itself, as a matter of policy it does not supply Phoenix companies.
Simon Doggett, managing director of KW Doggett says, "We have stopped supplying Geon, and have asked for access to all Geon sites to recover our inventory, and will not be making any more supplies until we receive 100 cents in the dollar of what is owed.
"It is a very disappointing development, and not at all what we were led to believe from discussions we have had with the company recently."
Spicers is waiting on development, a spokesman says the next 48-72 hours will be crucial.
Suppliers are forbidden under the Trades Practices Act from organising a collaborative boycott to a trading entity, but there is nothing to stop them acting to recover monies owed individually and making their positions known to the market.
The as yet undisclosed the debt owed to paper companies by Geon is almost certainly millions of dollars, and could be as high as $20m-$30m, given that Geon is a $300m business and paper costs are is usually arund 30 per cent of the turnover.
The paper companies are insured, most of them with QBE, which is almost certain to push up its premiums by a not insignificant amount as a result of having to pay out on such a whopping sum, meaning that as a result of Geon’s collapse all print businesses will have to pay more for their paper.
In addition credit terms will be more costly.
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