Creditors and company members voted unanimously in favour of a $40m restructure scheme by printing company Ovato that will cut 300 jobs and close its heatset plant at Clayton in Melbourne before Christmas 2020. The plan asked creditors to accept 50 cents in the dollar.
“The creditors' and member's meetings have now been held,” Ovato told the ASX on Tuesday. “At all member's meetings the proposed resolutions were passed unanimously. The key suppliers and statutory creditors in attendance and voting at the creditors' meeting unanimously voted in favour of the creditors' scheme of arrangement.”
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| "Key milestone": Ovato CEO, Kevin Slaven |
Ovato CEO, Kevin Slaven said: “The vote is the next key milestone on the path towards implementation of the restructure and recapitalisation of the business, involving a capital injection of up to $40 million, 300 redundancies and the closure of the Ovato printing plant at Clayton in Melbourne.”
Subject to the completion of other restructuring initiatives, Ovato will proceed to a second hearing in the Supreme Court of NSW currently scheduled for 18 December 2020, seeking final orders that the creditors' scheme of arrangement and member's schemes of arrangement be approved.
Ovato Limited last month announced a $40m rights issue and filed for a Scheme of Arrangement in the NSW Supreme Court that asked creditors to accept 50 cents in the dollar and outlined the plan to cut 300 jobs in Melbourne.
The company had flagged the job cuts in August as it posted a net loss of $108.8 million for 2020, with sales revenue down by $130 million, mostly due to the impact of Covid-19.
“The primary purpose of the Creditors’ Scheme is to seek a compromise from the major creditors of Ovato Print Pty Ltd and to bring about a reduction in the capacity and size of the workforce of the Group's printing business which has been adversely affected by structural trends in the industry and the pandemic,” Ovato said.
“The proposed new equity, underwritten by two significant players in the printing and media sectors, together with the indicative support of our major suppliers and financiers to restructure our balance sheet, provides the foundation for a viable, sustainable and exciting future for our Group,” Slaven said at the time.
The Australian Manufacturing Workers’ Union (AMWU) has slammed the proposal and urged Attorney-General and Minister for Industrial Relations Christian Porter to "intervene in a NSW Supreme Court case that will leave workers at printing giant Ovato stranded over Christmas with no pay.
“During a difficult year these workers have made every effort to support Ovato through the pandemic but now they’re being left in the lurch," the AMWU said. "This is not a case of corporate collapse - Ovato are solvent now and will be solvent after a restructure.
“The AMWU is calling for Porter to urgently intervene to stop the FEG being abused as a loophole for big businesses like Ovato to not pay working people what they’re owed. This dangerous case sets a precedent for big business to shirk their responsibilities to pay working people by deferring the cost to the FEG, therefore the taxpayer.”
Shares to be suspended from trading until 29 December 2020
Ovato has also agreed to a suspension of trading of its ordinary shares until 29 December 2020, when new shares proposed to be issued under the Entitlement Offer are expected to commence trading.
A revised Ovato investor presentation for the offer has been released on the ASX.
