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Champ Private Equity hires Goldman Sachs to sell Blue Star

Tuesday 24th July 2012

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Champ Private Equity, the Sydney-based buyout firm, has hired Goldman Sachs to sell its indebted printer Blue Star Group after receiving unsolicited approaches to buy the business in June.

Goldman Sachs is assessing the approaches and looking at other possible avenues for sale on behalf of Sydney-based Champ, which bought its controlling 84 percent stake in Blue Star in 2006 from interests associated with then-managing director Tom Sturgess at a price based on an enterprise value of $385 million.

The company said senior lenders had agreed to maintain their support during the sales process. Blue Star last year convinced bond holders to roll over $105 million of NZDX-listed bonds, extending the term and providing more financial covenant headroom. The new bonds, which mature in September 2015, last traded at 1.2 cents per $1 face amount.

While the restructuring provided some breathing space, Blue Star's trading hasn't been as strong as had been hoped when it issued a prospectus for the transaction.

In its first-half results, chairman Nick Greiner said earnings before interest, tax, depreciation and amortisation for the year ended June 30 would fall short of the $53.6 million it had forecast as a "poor trading environment" in the first half was likely to continue.

Blue Star's sale price is reportedly A$100 million to $150 million, depending on the shape of the sale, the Australian Financial Review reported, though company sources called that "just speculation" and wouldn't confirm that the sale could be completed in a matter of weeks.

Blue Star has bank debt of some $167 million and finance leases of $43 million. The printing group also owes Champ $16 million via a senior loan, bringing the total owed to $226 million.

The amended capital bonds were given at $18.7 million, compared to the value of the pre-amended bonds a year earlier of $135 million including accrued interest.

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