The collapse of the biggest sheetfed printer in the country has left a long list of winners and losers, well in fact mainly of losers, with few winners, writes Australian Printer editor Wayne Robinson.
1. Losers: The entire print industry. Gresham’s ill-conceived and ultimately disastrous attempt to engineer big money from financial wizardry drove print prices steeply downwards, to unsustainable levels, as it struggled to keep its vast array of presses rolling.
2. Losers: The entire print industry. The high-profile collapse of Geon will mean credit will be even harder to obtain for ordinary printers than it already is, in the eyes of bankers all printers will be tarred by the same brush, and even if credit is available it will be more expensive.
3. Losers: The entire print industry. Paper prices are likely to rise as the merchants’ insurers look to recoup some of their losses from Geon’s collapse.
4. Losers: The 400 or so Geon creditors. With KKR having claim on the first $80m that comes in from the sale of Geon businesses and assets it is unlikely the unsecured creditors will see very much of their money. Many of those creditors are small printers who will likely collapse under cash flow pressure without their Geon money.
5. Losers: Gresham private equity. Its belief that it could make serious money from buying print businesses, consolidating them and then floating has backfired badly, to the tune of a seriously eye-watering half a billion dollars. Back in 2005 Gresham paid $200m for Pacific Print Group and a further $127m for Promentum two years later, and along the way has tipped in a further couple of hundred million dollars. Four weeks ago it sold Geon for $5m.
6. Losers: The 1200 staff at Geon, of whom only a quarter at most will continue to work for post-Geon entities, with most of these in management and sales roles.
7. Winners and losers: The guys that owned the print businesses that were snapped up by Pacific and then Geon. At first they could hardly believe their luck when the suits came a’knockin and handed them gigantic wads of cash, but since then most have struggled to come to terms with the consequences, as the businesses they and their fathers built up with hard work, long hours, mortgaged houses – and a few schooners - have been decimated, and the staff they know thrown out of work.
8. Winners: The entire print industry. With Geon’s pricing now turned to dust the rest of the country’s printers should be able to compete at sustainable pricing levels. Competition in print will always be keen, but at least with Geon gone it should be a fair game, or as fair it ever will be.
9. Winners: Geoff Selig and Tom Sturgess. The former Blue Star execs now control about 20 per cent of the trans-Tasman sheetfed business, they are not laden with unsustainable debt, and have no great competitor.
10. Winners: The entire print industry. For the first time in its history the print industry stood shoulder-to-shoulder and refused short-term gain in order to reap some long-term benefits. The pre-pack Geon move by financier KKR (which many in the industry saw as a naked Phoenix play) would have seen Geon emerge debt-free, it failed because paper merchants withheld stock and printers refused outsourced jobs. In a fragmented industry that sort of cohesion and unity can go a long way.
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