New Owners For Polestar - GBP557m Debt Wiped Out

Polestar Group has received the unanimous support of its senior secured lenders for a recapitalisation and restructuring of the business.

Polestar Group has received the unanimous support of its senior secured lenders for a recapitalisation and restructuring of the business.

The transaction, which is expected to be completed on December 12, has been structured with a view to ensuring Polestar is placed to maintain its position in the printing market, said the company.

The existing senior secured lenders, a group of financial institutions, will become the new owners of Polestar as part of the transaction.

They will convert 67 per cent of the total outstanding amounts owed under the existing Term A, Term B and revolving credit facilities in for 100 per cent of the equity in the group.

The debt equity conversion will be structured through a newly incorporated company being formed to acquire the group.

The previous owner of Polestar will no longer have an equity interest in the group.

The recapitalisation provides the business with a new sustainable capital structure, it is claimed.

The Group will reduce its total outstanding debt from GBP814 million to GBP257 million, which includes existing finance leases of under GBP105 million and new facilities of GBP145m.

The new facilities comprise three tranches of debt: new terms A and facilities of GBP40m each and a new GBP50m Tranche 2 facility.

In addition to the term facilities, a new working capital facility of GBP15 million will be provided by the existing senior secured lenders.

Tranche 2 will include GBP35 million of new money.

The balance of the tranche 2 debt and new term A and B facilities will be rolled over from the existing facilities.

As part of the recapitalisation, Polestar will cease to be the sponsor of the pension scheme but the scheme will continue as a closed scheme (having closed to scheme members last April).

The Pension Regulator has issued a clearance statement for the pension scheme proposal.

The intention is both that the scheme will be eligible for future entry in to the Pensions Protection Fund (if necessary) and that members' entitlements under the scheme will not be changed as part of this transaction.

Polestar has agreed to cash contributions totalling GBP45 million to the scheme over a 12-year period.

Commenting on the developments, Polestar's chief executive officer, Barry Hibbert, said: "The completion of the restructuring has greatly strengthened Polestar.

The recapitalisation provides the business with a stable platform, which will allow it to focus on the opportunities in the market place.

This news has created a bedrock for an exciting future for Polestar." He added: "This has been an extremely complex process.

The fact that Polestar has been the net gainer of market share during this time and didn't lose a single customer, is testament to the fantastic support given to the group by its customers and suppliers.

Everyone familiar with Polestar is aware that this restructuring of the balance sheet is long overdue and it puts the group in to a completely different financial structure, which will create an exciting future for everyone connected with the group." Hibbert commented that he believed that consolidation of the industry is overdue, both in the UK and mainland Europe and Polestar intended to be a leader to help facilitate that consolidation.

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