Just seven months ago Polestar refinanced with new credit facilities from Barclays, and a £90m loan from Swedish finance house Proventus Capital Partners. In October owner Sun Capital injected a further £10m into the business via new equity.
At the time chief executive Barry Hibbert said the £216.4m turnover firm’s financial performance was on track with expectations. Its most recent financial year ended on 30 September, but those results are not yet filed.
PrintWeek understands that major creditors were informed on Friday that future payments would be on a pro-forma basis while the restructuring takes place, and Polestar executives were briefing creditors on the situation today.
Payments to some existing creditors are being deferred until the New Year.
Hibbert told PrintWeek that the company and its stakeholders were considering the best options for the group’s debt and equity structure “in a falling market”.
“Deloitte are our bank advisors and they are now working on a significant project for the board. We are quite advanced with a revised equity/debt structure we hope to complete in the next few weeks,” he said.
“We have recently downgraded our forecasts as demand in newspapers is down over 20% in two years, and weekly magazines are forecasting continuing decline for at least the next few years.
“On top of this prices in gravure commercial work across Europe have been falling all year driven by the exchange rate, falling demand and overcapacity,” he stated.
“It basically means we will need to reshape some debt and equity aspirations to manage this on-going decline and ensure we have the right finance structure in place for the next few years.”
Hibbert said he hoped the new financial structure would be completed in the next few weeks, and said the group had “strong cashflow and EBTDA margin to counter this downward trend.”
“River publishing and Applied Solutions are very strong double digit growth in sales and EBITDA as a contrast, but not enough to counter the fall in demand in the core business,” he added.
“Having reduced our platform from 20 main sites to five and 5,500 people to 1,800 in a decade it's hardly surprising that eight out of our ten main competitors have disappeared in the same period. Polestar will have to continue adjusting its physical and financial structure.”
Polestar chief financial officer Peter Johnston left the business in October, followed by chief operating officer Peter Andreou.
Johnston had overseen a number of complex refinancing deals during his tenure, including the pre-packaged sale of Polestar to Sun in 2011, when the business had come close to collapse.
“They parted company with the most knowledgeable restructuring guy in the industry just when they needed him,” said a source.
Separately, there has been a rethink over the proposed closure of sheetfed site Stones in Banbury.
Hibbert said: “Following consultation with the workforce we have decided to put the move on hold as we will gain some significant benefits leaving the company in situ and we want to explore some productivity ideas put forward by the representatives. We will work with the workforce on some new initiatives. This will also allow is to accelerate the closure of satellite buildings used for finishing in Buckingham that supplies Bicester.”
