Beleagured flexibles and industrial specialty packaging company, ASX-listed Pro-Pac Packaging Group (PPG), has appointed partners from McGrathNichol Restructuring as voluntary administrators, as a buyer is sought for all or parts of the business.
The administrators for PPG's AU entities are Keith Crawford and Rob Smith, and for New Zealand entities, Andrew Grenfell and Kare Johnston.
There are 23 listed entities for Australia and two for New Zealand. Headquartered in Melbourne, Pro-Pac delivers bespoke packaging solutions for the industrial, food, beverage, health, agriculture and manufacturing sectors.
In a media statement on the ASX, McGrathNichol Restructuring partner Rob Smith said, "We are urgently engaging with key stakeholders to maximise the prospect of successfully completing a sale or recapitalisation of PPG, or sales of its various business units. We are exploring options that offer continued employment of PPG's workforce, and enable the business to continue producing high-quality packaging solutions for domestic and international customers."
The first statutory meeting of creditors will take place by Monday 3 November.
The company has been facing difficulties for some time. After a challenging FY24, its first-half FY25 results saw revenue for continued operations down by 10.1 per cent across the group, at $142.9m, while losses (profit before tax) were in the red to the tune of $12.8m, some $7.3m more than the corresponding period in the prior year.
Reasons cited were a tightening market, adverse currency exchanges, and a dramatic decline in sales to its major Middle East customer, which alone left a $13.6m hole in revenue. Excluding that hit, volumes in the Flexibles business were still down by three per cent, which were attributed to "challenging market conditions and weather conditions in Australia and New Zealand which impact agricultural volumes".
At the HY results announcement in March, the company said it had called in advisors for a strategic review of the business.
On 29 August, PPG gave a market update on the strategic review, noting it was "negotiating with several bidders on a number of potential transactions. At that date, no transactions had "reached an acceptable level of certainty", and the subsequent announcement of its entry into VA indicates that negotiations have yet to progress satisfactorily.
Also on 29 August, the company confirmed that its major shareholder, Bennamon Pty Ltd, owned by Raphael Geminder, had provided an additional secured loan facility of up to $3 million. It further notified shareholders that its shares would be automatically suspended by the ASX from Monday 1 September until such time as it could release its full year accounts.
On 10 October, current CEO Ian Shannon resigned as a director, while remaining as the CEO. On 21 October, company secretary Kathleen Forbes resigned, with Shannon taking over interim responsibility for the role.
PKN will keep readers updated as new developments emerge.
