Blue Star's major shareholder starts debt-to-equity process
Blue Star Group says major sharehold CHAMP Funds has formally begun the process to convert a $10 million loan plus $2.7 million in accrued interest into equity.
Monday, May 28th 2012, 6:00AM
by Jenny Ruth
CHAMP made the offer in August last year as part of a successful attempt to persuade bond holders to vote for a restructuring proposal which included cutting the $137.3 million they were owed to a then net present value of $44 million.
Bond holders approved the restructuring on August 10. Blue Star didn't say why it has taken so long for CHAMP to act on its undertaking.
The company also says in its quarterly moratorium report for the three months ended March 31 that it has engaged a consultant to help it find an additional independent director.
Since the bond holder vote, managing director Chris Mitchell and director Tom Sturgess have resigned.
The report reiterated that Blue Star's financial performance in the six months ended December was worse than forecast - it reported a $15.6 million loss for the six months, up from the $6.3 million loss it reported for the same six months of 2010 - and the company may breach its banking covenants if its performance doesn't improve.
"While it is anticipated that the group will continue to comply with the periodic financial ratio covenants under the senior (banking) facility for the forseeable future, both the key financial ratios and the group's liquidity position is dependent on the operating performance in what continues to be a very challenging business environment."
The company is continuing to focus on cost cutting and "revenue initiatives."
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