OSG Holdings filed for Chapter 11 in Texas yesterday (15 October), in order to facilitate a recapitalisation of the business.

It had previously emerged from a fast-track pre-packaged Chapter 11 process that allowed the group to restructure its debt, in September 2022.

A Communisis spokesperson shared a statement explaining the situation, which said: “As part of this arrangement, OSG will exit the Communisis business once the Chapter 11 process completes.”

They said there was no impact on its day-to-day operations, and the Communisis entities are not part of the Chapter 11 process.

“More broadly, we have been working closely with our advisors, customers and stakeholders over the past few months to explore a number of strategic options which will enable Communisis to move forward independently on a positive and sustainable footing. 

“These options include a potential sale of the business, and so it’s at this point that we can confirm that we are currently in advanced discussions with a number of parties with a view to them acquiring the Communisis business. 

“While the nature of these discussions remains confidential at this stage, we will provide a further update in due course.”

There has been growing industry speculation about the likely future for Communisis in recent weeks, with a number of customers understood to have moved their work, including HMRC.

The Leeds-headquartered business was acquired by OSG in 2018 for nearly £154m. At the time Communisis had sales of £376m.

In the group’s most recent accounts, for 2021, sales were £255.9m. Its transactional print business took a big hit with sales down 20% as banking customers accelerated their migration to digital comms.

Sales at its brand deployment wing grew by 6.1% year-on-year and accounted for 52% of revenues.

EBITDA, pre-exceptionals, was £20.2m but the bottom line loss attributable to equity holdings of the parent company was nearly £25m, while the equivalent loss the prior year had been £39.8m.

During the period, interest paid on a £132.4m loan from the parent company was nearly £9m.

Communisis employs more than 1,000 people directly. It agreed a major outsourcing deal with Indian group Tech Mahindra last summer.

Inevitably the ever-acquisitive Paragon Group has been tipped as a potential buyer for all or part of the business.

However, the Communisis legacy pension scheme is likely to complicate any sale deal. It had a net deficit of £20.8m in the 2021 accounts, with Communisis committed to a substantial payment plan that included nearly £5m of payments last year.

“The board continues to work with the trustee to see opportunities to reduce the deficit and liability exposure and accelerate progress to the goal of ‘self-sufficiency’ for the defined benefit pension scheme,” the directors stated in their 2021 report.

An industry source commented: “You could see it would be a natural fit with Paragon, but whatever transaction is done, it’s going to be a very complex one.”

A large marketing services specialist has also been linked a possible bid for the brand deployment wing, which includes a substantial amount of international business.