A brief virtual meeting saw magazine publisher Are Media partly “pay forward” to acquire the former Gordon & Gotch magazine distribution business from printer Ovato.
Some 99.75 per cent of votes favoured the sale Ovato Retail Distribution and its NZ stablemate to Are Media, taking on a new short-term loan of $2.5 million from Are (making a total of $4.8 million) until the deal goes through.
Are – which belongs to Mercury Capital – owns 16.38 per cent of Ovato and is a sister company of NZ printer Webstar.
The sale is in two parts, $10 million for the Australian business – with $22.5 million of debt, and $5 million for the New Zealand business, with $4.5 million of debt. Differing requirements for regulatory approval mean the first deal is expected to go through on July 31, and the second on August 30 or soon after.
Are accounts for about 40 per cent of the retail distribution business, which has shrunk by about a third in the past four years.
The new loan is interest-free and will be used to make priority payments to employees, enhance the working capital, repay debt and assist in restructuring.
Earlier this month, Ovato announced it was closing its residential distribution business in Australia from the end of July, following a steep decline in volumes.
Chief executive and managing director James Hannan said the volume the network required was “some way off” and the business could no longer offer this support. The move will allow it to further focus on its core business of print – “something we are deeply committed to”.