Polestar has a sound business, says Daniel Sachs CEO of Proventus Capital Partners, the Swedish private equity company that has stepped in to save the group after Sun Capital Partners decided to cut its losses in the UK’s largest print business.
This prompted a review of the business by Deloitte which warned that without further funds the business would run out of cash before the end of the year. It outlined four scenarios for Polestar, a pre-pack, debt for equity swap, administration, or a sale. In an unexpected move, Proventus came in last week with the necessary support.
It had first taken a stake in the business in April with a six year £90 million loan. That will be increased thanks to the latest deal, but the investor is not saying by how much, nor what the final arrangements might look like.
Sachs says: “ Proventus Capital Partners is an active credit investor and loan provider to northern and western European companies in need of capital for expansion, acquisition financing, restructuring and refinancing. As the previous owner has decided not to support the company any further, we have decided to take control with the aim of restoring operations to normal and securing the value of the business for all stakeholders.
“As we have stated, we intend to inject additional funding to stabilise the business and will be seeking further support from other stakeholders to secure the longer term prospects of the Polestar group. For the long term, we are always open to what is in the best interest of the business.”
The capabilities of Polestar were put to the test last week with the annual production of the key tv listings magazines. While not having the print runs of yesteryear, when TV Times and Radio Times might sell 11 million copies each, it remains a logistical challenge. In all Polestar printed 8 million copies of six titles, equivalent to 47 million 32pp sections using presses at Bicester, Chantry and Sheffield combining gravure and 96pp sections from its Goss 5000s. This year’s run also involved York Mailing, Prinovis and First 4 Print Finishing.
However, Polestar’s problems stem from the long term decline in magazine printing, the seasonal nature of much catalogue and commercial work and the relative strength of sterling making printing on the continent more competitive.
As yet the new owner is giving nothing away about how Polestar can respond to these market conditions. Says Sachs: “We know the business from our position as a major lender and we have of course followed the development closely in recent months. We believe the business is sound and will now look into how we can support a way back to normal operations. That is as far as I would like to comment the business.”
Proventus Capital Partners manages funds to the value of €2.5 billion and has stakes in a wide range of businesses. It says it provides funds to mid sized companies in need of funding all over Northern Europe. “Either for more forward looking reasons such as acquisitions, growth and working capital, or investment, or for more defensive reasons such as re-financings or restructuring.”
In normal circumstances, the company will decide on an investment over a four-six week cycle at the end of which it will take a seat on the board as an observer and will expect monthly reports.
It has funded bonds for the likes of furniture retailer DFS, the Metro newspaper group (not the separate UK Metro) and provided loans to Thomas Cook, Norwegian Saas and software group Meltwater and now Polestar. Most loans fit within the €10million to €120 million range, making Polestar already one of its largest investments to date.
Polestar is geared towards printing and finishing high volumes of magazines, supplements and catalogues, printing eight television listings magazines for example. It is a sound business according to Proventus, the Swedish private equity company that is prepared to lead a further financing of the business.
