OPUS Group Limited completes a debt forgiveness and recapitalization with 1010 Printing Group

October 2014 — Australia-based OPUS Group Limited (OPUS) has completed a debt forgiveness and recapitalization with Hong Kong's 1010 Printing Group (1010).

OPUS is an Asia Pacific, technology-based full service provider of print and digital content production, management and distribution solutions. OPUS employs a flexible technology platform that enables it to produce and distribute published content to suit the timing and scale requirements for a range of customer segments, including global read-for-pleasure, educational, professional and technical book publishers and the Australian Federal Government and its agencies. OPUS is also Australasia’s leading producer of billboards and other specialist signage for the outdoor advertising and transit sectors. They operate from facilities in Sydney, Canberra and Maryborough (Australia), Auckland (New Zealand) and Singapore.

1010 is a Hong Kong-listed printing and print management business with global operations. It was founded and continues to be managed by CK Lau, a well-known identity in global publishing and the largest shareholder in 1010.

1010 agreed to acquire OPUS banker’s loans for US$30 million, being approximately 50% discount to face value. At the same time, negotiations with one of OPUS’ executive directors and a stockbroking firm were carried out to raise sufficient new equity to ensure that OPUS would be well capitalized if 1010 was able to make an agreement with the bank. In early September, OPUS announced a recapitalization pursuant to which US$8 million of capital would be raised and 1010’s debt would be converted to equity in conjunction with a debt write-off of US$30 million. As a result of the recapitalization, 1010 owns approximately 60% of OPUS which is debt free on an ongoing basis.

Since the announcement of the recapitalization, OPUS has completed a long overdue restructuring of a significant part of its business, with interim funding provided by 1010, which will enhance the profitability of the company going forward.

Our role in the transaction

Oaklins' team in Australia was initially appointed in early 2013 to review the strategic options available in respect of OPUS’ outdoor advertising business, and undertook a formal sale process with the objective of reducing debt. During the course of the assignment, OPUS was obliged to make market disclosures in respect of impositions placed on it by its banker. As a result, the sale process became tarnished and the business was withdrawn from the market.

The role of the Australian team was then expanded following OPUS’ announcement at its AGM in November 2013 that it would explore the potential for raising capital to address its medium-to-long-term capital needs and growth plans.

Assisted by other Oaklins' member firms, the Australian team identified and contacted more than 30 parties both in Australia and overseas who might have been expected to have a strategic interest in investing in OPUS. As a result of that process and after exploring several other potential transactions and alternatives that were proposed, 1010 Printing Group Limited emerged as the most appropriate partner for OPUS.

The team in Australia advised OPUS on all aspects of its recapitalization and continues its relationship with the firm through a role on its restructured board.