Head-scratching about Goodhead

While we await the white smoke to emit from Bicester, signalling some sort of resolution to the future ownership of Goodhead Group, I’m sitting here scratching my head about what shape this deal will take.

Polestar owner Sun European Partners is very definitely in the driving seat, and Sun is certainly adept at nailing down deals.

With due diligence underway as I type, I can imagine the Polestar team going through the Goodhead books with a fine-toothed comb. Oh, to be a fly on the wall.

As we know, Sir John Madejski’s circa £100m spend is undoubtedly the single-biggest investment by an individual in a printing business. The likelihood of Sun giving him £100m, or even a fraction of that, is about as likely as, well, Goodhead hitting a profit target.

Equally, Sir John is hardly going to want to crystallise such a humungous loss. So one could imagine a situation whereby he converts some or all of his loan into an equity stake in some sort of newco created out of bits of Polestar and Goodhead.

But. We also have the not-so-small matter of the Goodhead’s defined benefit pension scheme and the deficit therein.

Nobody, least of all the parties involved in this deal, would take on a liability as onerous as this. The triennial valuation of the scheme was due this year and it’s entirely likely that the deficit will turn out to be some way north of the £10.3m figure in the latest accounts.

And let’s not forget, while Goodhead’s results have improved this year it’s still loss-making. Sir John has been required to reach even deeper into his pockets to dole out further ongoing support.

I fully realise that Goodhead’s debts and pension deficit are not Polestar’s problem.

However, this is a different set of circumstances than, for example, when York Mailing acquired Pindar’s Scarborough factory. The entire Pindar group had already gone into administration.

And when Sun bought Polestar in a pre-pack deal it was able to jettison the inconvenient pension liability because the scheme had become an ‘ordinary’ creditor due to a previous manoeuvre.

All of which makes me think some sort of complex insolvency process/pre-pack could be inevitable. And that’s not going to be pretty.

Meanwhile, the rumours about what will or will not transpire once the deal is done are becoming increasingly febrile. I was informed this week that Polestar would effectively create a supersite on the cheap by moving the kit from BGP to a new web offset facility next to the Sheffield gravure site.

Sounds crazy? Maybe. But over my many years of obsessing about the web offset market I have learned that just because something seems mad, it doesn’t mean it won’t happen.