Greek lesson to be learned from Pindar pre-pack sale

Simon Nias
Thursday, July 28, 2011

Pindar's sale brought to mind the financial crisis in the Eurozone, which has led to another bailout for the heavily indebted Greek government. This has rightly been termed a 'selective default' by ratings agencies, resulting in further downgrades for Greece's already junk-level bonds.

The Greek bailout is itself reminiscent of a CVA in that creditors have agreed to take a haircut on their debt in order to facilitate a refinance and avoid a more significant default. However, as with most CVAs – particularly in print, this is not a plan that can work. Greece is insolvent and no amount of additional loans will serve to correct that, particularly when those loans are now attracting credit card-level interest rates.

Economists have estimated that it would take up to a 70% haircut for Greece’s debt to achieve a sustainable level. The scale of the problem makes a default inevitable. The same situation has been facing Pindar, with the size of its pension deficit negating the possibility of a solvent sale. And so we have the dreaded pre-pack.

However, in this instance, I would argue the pre-pack was the only solution. Unlike Greece, which has done an ‘extend and pretend’ refinance, Pindar’s administration and the sale of its Scarborough site means that the business can now move forward on a more sustainable footing. In the process, jobs have been preserved, along with a major client of consumables suppliers, not to mention a chunk of the UK’s dwindling print history.

Hopefully, freed from the worst of its debt, Scarborough’s famous print firm will have a long and profitable future under its new owners and in so doing, I would wager, have laid the path for Greece to follow.

Simon Nias is news editor of PrintWeek

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