Blue Star Print Group opens $105 million Capital Bonds offer

Blue Star Print Group (BSPG) today announced the opening of an offer of $75 million of Capital Bonds, with the right to accept oversubscriptions of up to a further $30 million. Representing an investment in a leading diversified printing business, the Capital Bonds will have an attractive minimum annual interest rate of 9.10%. BSPG is pleased to advise that $75 million of the offer has been taken up by brokers and institutional investors on a firm basis; with a further $30 million reserved for rollover by existing holders of Subordinated Bonds. There will only be a public pool if the rollover reservation is not fully utilised.

“The Capital Bonds Offer is an excellent opportunity for people to invest in an Australasian company with proven strengths and a track record of consistent growth. Blue Star Print Group is the leading commercial printer in New Zealand and one of the largest printers in the Australian market,” said Tom Sturgess, Chairman, Blue Star Print Group.

The Capital Bonds Offer is open to new investors and existing Subordinated Bond holders, who will be offered a limited conditional opportunity to rollover their bonds into the new issue of Capital Bonds. There are conditions to this rollover which are set out in the Investment Statement and Prospectus. The Capital Bonds Offer is available to New Zealand investors only.

Funds raised by the bond offering will be used to repay BSPG’s senior debt and potentially the company’s existing Subordinated Bonds. Over the longer term, BSPG may use the funds to pursue growth opportunities and potentially pay dividends on, or redeem, some of its Redeemable Preference Shares.

Mr. Sturgess said the Offer will assist BSPG to adjust its capital structure to reflect the company’s strong operating and financial performance while maintaining a robust proforma debt coverage ratio.

“BSPG has a history of steady earnings growth. For the 2005 financial year BSPG had a turnover of $368 million and EBITDA of $51.0 million (including net abnormal gains of $4.9 million). Over the last three years revenues and adjusted EBITDA have grown at compound annual growth rates of 7.9% and 10.4% respectively.”

“Over the last four years BSPG has invested $89 million in printing and operating technologies to enhance our offering and support our market leadership. Our diversified earnings base and quality client list delivers solid operating cashflows, enabling continued investment in equipment, capability and production efficiencies,” Mr. Sturgess said.

BSPG operates some of the most well-established printing businesses in New Zealand and Australia. Capabilities include sheet-fed, web offset, digital and label printing as well as print management, mailhouse and logistics solutions, serving a diverse customer base including leading multinational companies and Government agencies in both countries.

“Bondholders will have the assurance of BSPG’s covenant package, which includes both debt/EBITDA and EBITDA/Interest Expense covenants. This provides additional protection for BSPG’s investors,” said Mr Sturgess.

The Capital Bonds Offer is expected to close on 16 December 2005. The Capital Bonds will mature on 15 September 2012, but may be prepaid earlier in some circumstances.

The holders of Capital Bonds will have a right to participate in any future public offering, including a discount of three percent to the public offering price. Although BSPG has no current plans to undertake an initial public offering, this may change during the life of the Capital Bonds.

It is anticipated that the Capital Bonds will be listed on the NZDX. Application has been made to NZX for permission to list the securities and all the requirements of NZX relating thereto that can be complied with on or before the date of the prospectus have been duly complied with. However, NZX accepts no responsibility for any statement in this announcement. Distributions will be paid quarterly, with the first Interest Payment Date scheduled to occur on 15 March 2006.

Goldman Sachs JBWere and First NZ Capital have been appointed joint lead managers of the offer.

ENDS


For further information contact:
Keith Brodie, Managing Director on (09) 4770400; or
Tom Sturgess, Chairman on (03) 5457600; or
Rachel Catanach on 0274 322 784

Blue Star Print Group
Blue Star Print Group is a leading Australasian commercial printing group headquartered in Auckland. It is New Zealand’s largest multi-disciplined full service print provider and also has a significant presence in Australia through its operations in Sydney and Melbourne. BSPG employs over 1,200 staff within three divisions and a labels business. Its portfolio of established brands, including McCollams, Nicholsons, Format, Printlink, Securacopy, Webstar, Rapid Labels, BSP Integrated Solutions and BSP Logistics in New Zealand and Link Printing, Kings Mailing Services, Craftsman Press, Webstar, BSP Integrated Solutions and BSP Logistics in Australia, services a diversified customer base in both countries. Clients include agencies and departments of the New Zealand government and many of Australia and New Zealand’s leading corporates and financial institutions. Over the past four years, it has undertaken an extensive $89 million capital expenditure programme that has resulted in modern technologies across all business units. Blue Star Print Group generated revenues of NZ$368 million in FY05 and EBITDA of NZ$51 million (which includes net abnormal gains of $4.9 million). BSPG is a privately owned company, with senior management participation.



Dated: 15 November 2005

Signed Keith Brodie, Director