Administrators Tom Straw and Simon Thomas of Moorfields Advisory reported that accumulated trading losses had left the large-format print specialist with a working capital requirement “in excess of £800k”. The company had breached its banking covenants and also failed to meet the terms of a ‘time to pay’ arrangement with HMRC involving around £500k of liabilities.
HMRC declined a request for a new arrangement.
Secured creditor Aldermore Bank was owed £1.8m. Its debt was also personally guaranteed by Odessa Print Group directors Bob Charles and Laurence Matthews.
Odessa had tried, unsuccessfully, to diversify as its core business for outdoor advertising products such as billboards declined. Management accounts for the year ending 30 September 2019 showed sales down by almost £2m to £13.3m on the prior year, with bottom line losses increasing from £301k to £437k.
The firm also experienced a £200k bad debt when customer Logans Run Print Management went bust in November 2018.
The administrators ran an accelerated sale process with five parties expressing interest in the business, although none submitted formal offers.
The only offer received was from Charles and Matthews via their new company, Odessa UK.
Odessa UK acquired the business and assets on a going-concern basis via a pre-pack deal for £2,097,273. This included £819k for tangible assets and goodwill, and just under £1.3m for the debtor book.
There is a deferred consideration element. Odessa Print Group’s sales ledger was £2,469,154 at the time of the administration, with the net realisable ledger expected to be “no more than £1.7m”.
The sale agreement means that the administrators will receive 50% of the debts received in excess of the initial consideration, less a 3% collection fee.
Odessa UK, by definition a “connected party purchaser” opted not to approach the Pre Pack Pool for its opinion on the purchase, and did not provide a viability statement.
Around 70 staff transferred to Odessa UK via TUPE.
The administrators said the pre-pack sale “was in the interests of creditors as a whole and appropriate in the circumstances of the case” given there were no other offers to purchase the business and a wind-down would have resulted in a lower return to creditors.
However, non-preferential unsecured creditors will receive nothing. According to the report, major trade creditors include HP, Pageant Graphics, and merchants PPB, Premier Paper Group and Topstock Papers.
The total estimated deficiency is just under £2.3m.
