Bluestar Group (BLU020)

[Enumerate]

Has anyone seen any recent news from this issuer?

Price collapse is on reasonably thin volume. There is no liquidity in this stock.

If you calculate your interest tax on an accruals basis - this would be a very miserable stock to hold.

We should have some numbers in August.

[sleepdog]

Blue Star is owned by private equity firm, Champ, which bought it three years ago for NZ$385 million. Champ has recently allowed another one of its properties, discount chain, ’Go-Lo’ to fail.

[Alan3285]

Not sure about volumes, but I note that right now (close of business today effectively), the bid / offers were at:

95% / 62%

So, if you want to look at it this (one sided) way, the best price you can acquire these bonds for (or alternatively, the lowest price that any current actual holder of the bonds will sell for) is 62%.

Clearly one issue is liquidity with a bid / offer spread that wide.

I think 62% is quite a good yield, as long as you don't need the cash flow from interest. I would be disappointed if they don't pay the accrued interest and resume interest payments in 2012.

Alan.

[Dubdee]

Blue Star snatches ACP contract, $40m blow for PMP
Duncan Bridgeman | Wednesday July 28, 2010 - 09:05am

Transtasman print group Blue Star Group has snatched the ACP Media New Zealand printing contract in a move described by insiders as “devastating” for the local arm of PMP.

Blue Star, privately owned by funds advised by CHAMP Private Equity, Tom Sturgess and Blue Star senior management, was awarded the contract two weeks ago, chief executive Chris Mitchell confirmed to NBR yesterday.

PMP Print (NZ) had held the contract but it was put up for tender when ACP’s parent company PBL Media shelved plans in April to build its own printing plant.

Mr Mitchell said the contract covered all ACP’s consumer magazines, trade press and the coveted New Zealand Property Press. Consumer magazine titles include Metro, Next, North & South, Woman’s Day, and The Australian Women’s Weekly.

“We are thrilled,” Mr Mitchell said.

He did not disclose how much the contract was worth but industry sources NBR spoke to estimated it at $40 million a year.

Blue Star already has a strategic partnership and printing contract with ACP in Australia.

This win should be welcome news to Blue Star's New Zealand bondholders, who have received no interest since September last year when Blue Star suspended payments after its parent company breached its banking covenants.

Blue Star has recently had its financial covenants re set but has told investors not to expect interest payments on capital bonds this calendar year.

In the meantime interest due is compounding at 13.1% per annum from the current coupon rate of 9.1%.

Blue Star Print Group reported an unaudited consolidated loss before income tax of $1.9 million for the six months to December 2009, compared with profit before income tax of $4.7 million over the same period a year ago.

Revenue was $295.6 million compared with $304.6 million a year ago.
Net cash generated from operating activities was $14.5 million compared with $23.9 million a year ago.

Mr Mitchell told NBR revenue from the ACP contract would help facilitate a return for investors.

“The business is moving forward now.”

Sources said the loss of ACP was a big blow for PMP.

“The impact will be devastating for PMP, which had the lion’s share for a long time … the market is tough and there will be some further changes in the next three months because of this,” one industry insider said.

PMP general manager Peter Browne was unavailable for comment.

[Alan3285]

Blue Star snatches ACP contract, $40m blow for PMP
Transtasman print group Blue Star Group has snatched the ACP Media New Zealand printing contract in a move described by insiders as “devastating” for the local arm of PMP.

Yeah - I saw that too.

Excellent news for us as BLU020 holders.

Alan.

[sleepdog]

there probably doing $40m of work for $30m

[Alan3285]

there probably doing $40m of work for $30m

I doubt it - why would they?

More likely they are doing work that PMP was making $15m profit on, for $5m profit.

Alan.

[Enumerate]

Our Bond and senior debt covenants are only revenue based ... even if they break even, this is good news for bondholders.

[Alan3285]

Our Bond and senior debt covenants are only revenue based ... even if they break even, this is good news for bondholders.

That's absolutely true, but I meant that the management will be making decisions that they believe are positive to the bottom line either short or longer term.

I am relaxed as a bondholder at this point.

Alan.

[Newman]

Our Bond and senior debt covenants are only revenue based ... even if they break even, this is good news for bondholders.

For the first 6 months EBITDAR was $20 m from a revenue of about $300 m. If this ratio is kept $40 m new revenue would only add $2.7 m to the whole year EBITDAR. Further, we dont know if Blue Star lost any contracts while it gains new ones. Unless its shareholders inject new equity it would remain as bad as it is now.