The wealthy Hannan family has launched a bid to privatise ailing digital marketing group BlueFreeway, claiming the company cannot repair a difficult relationship with its main lender, National Australia Bank.
The Hannan family, which was valued last year by BRW at $680 million, owns 73% of BlueFreeway via its investment vehicle Independent Prime Media Group. IPMG also holds $11 million in secured debt and $7 million in secured convertible notes.
Family patriarch Michael Hannan has approached BlueFreeway’s sole remaining independent director, former NSW premier Nick Greiner, with the proposal, although a price is yet to be discussed.
The bid hinges on a number of specific conditions being met, including the renegotiation of earn-out clauses with certain portfolio companies.
Hannan took control of BlueFreeway early last year and has sunk more than $35 million into the company in an attempt to turn it around. When Harran arrived, the company was essentially a portfolio of more than 20 separate businesses and was battling with management problems. Over the last 12 months, head office and marketing costs have been slashed and a number of businesses have been sold off.
However, the company’s half-yearly report released in late February identified a number of problems plaguing the company, including earn-out clauses that had been negotiated at the top of the market, increasing bad debts and an “uncomfortable level of debt and covenants that leave little flexibility”.
It appears Hannan’s attempts to renegotiate these covenants with NAB have been unsuccessful – and he’s not happy.
“IPMG has never been involved in a company that has been on the backfoot with a bank in its entire 122-year history,” Hannan said yesterday.
BlueFreeway’s shares have been suspended since 16 March.
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
