Listed printing and marketing company Ovato is on track to secure the green light for its restructure after attempts to derail the process appear to have been thwarted.
Ovato announced a restructure in which it would launch a $40m rights issue to remain solvent and controversially announced that 300 jobs would go following the closure of its Clayton site in southeast Melbourne.
Of the equity raising, $35m would be underwritten by the company’s major shareholder, the Hannan family, which would account for $25m.
A further $10m would be underwritten by Are Media, which is an entity of private equity firm Mercury Capital, also an owner of printing and media assets in New Zealand.
However, it is understood that former Houlihan Lokey investment banker David Tozer, who now runs his own personal company, Tozer & Co, had bought up bonds owed by the company for about 50c in the dollar and had made objections about the restructure proposal that was on the table.
Retail bondholders are owed $40m by the company, and Ovato has previously said the holders of secured fixed interest notes would be asked to partake in a debt-for-equity swap.
Sources say Mr Tozer’s company interests may own up to 30 per cent of the bonds and that his objection related to the valuation placed on the business in the independent expert report undertaken by McGrathNicol.
McGrathNicol said in its report Ovato would be insolvent if the scheme was not approved.
However, the plan to proceed with the restructure has been given court approval, and shareholders will now vote on the plan on December 7.
Ovato said on Tuesday that it had launched its conditional and partially underwritten pro rata renounceable entitlement offer to existing shareholders, offering 10.93 new shares for every share held. Working on the raising is KordaMentha, while law firm Ashurst is advising the company.
The funds raised will provide additional liquidity, repay debt to lenders, including ANZ, Scottish Pacific and German equipment financiers, and for operating initiatives.
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