July 30, 2015 By PrintAction Staff
Mi5 Print & Digital Communications of Markham, Ont., over the past month has purchased certain assets and intellectual capital of two well-known printing companies in the Greater Toronto Area.
On July 6, Mi5 finalized its acquisition of Magnum Fine Commercial Printing Ltd., which was controlled by John Popovski, CEO of Media-Vision in Toronto. Popovski had purchased Magnum Fine one year earlier (July 2014) for $1.5 million from Intertainment Media Inc.
Mi5, on July 6, also acquired intellectual capital of Media-Vision, which primarily amounts to its name and associated brand vehicles, and then hired approximately 17 Media-Vision employees – a combination of salespeople, CSRs and pressroom operators, who have already been integrated into Mi5. Another 12 Magnum Fine employees have joined Mi5.
On July 21, the Ontario Supreme Court of Justice approved Mi5’s auction bid for specific assets of J. F. Moore Lithographers Inc. of Scarborough. J.F. Moore first filed a Notice of Intention to Make a Proposal under the Bankruptcy and Insolvency Act (BIA) in April 2015 and was subsequently granted a couple of extensions to work through a restructuring process. Following a June 23 court extension, however, J.F. Moore, controlled by Dean Baxendale, and its trustee moved to an auction process, through the BIA, allowing third parties to bid on the company as a whole or for specific assets.
Through this process, Mi5 is acquiring JF Moore’s book of business and intellectual capital, the latter of which includes its name and related brand properties. J.F. Moore itself is being liquidated on July 31 by Asset Services Inc. (ASI), which is scheduled to hold a J.F. Moore equipment auction between late August and early September. Approximately 12 J.F. Moore employees, including Dean Baxendale, are joining Mi5 in Markham on August 1.
“Dean reached far more into his own pocket than any other owner I have ever seen and it was done out of trying his best to do the right thing,” says Derek McGeachie, Chief Vision Officer of Mi5. “He protected a lot of his suppliers more than anybody else I have ever seen in his situation and I have a lot of respect for him for doing that.
“And [Dean] is continuing on, which is the other good thing. He is joining us and his goal is to fix what wasn’t right and make it much better going forward. That is admirable as well. He is not running away,” says McGeachie.
McGeachie, who founded Mi5, stepped back as CEO earlier this year in favour of Sheryl Sauder, who now leads the Markham company, one of North America’s fastest growing printing operations, which now generates around $40 million in annual revenues. McGeachie estimates the J.F. Moore and Media-Vision assets will initially bring approximately $10 million in additional sales.
“J.F. Moore is a good company. They have been around for 30 years, basically,” says McGeachie. “They have great customer relationships that we are looking forward to building on… the second good opportunity is they have some excellent, capable people that we are thrilled to have on board and the third opportunity is that they have some strengths in direct mail and digital small-format that we are happy to bring on board as well.”
The acquisition of Magnum Fine Commercial Printing, and hiring of Media-Vision staff, also brings in some new capabilities to Mi5. “They have some expertise that we do not have in their personnel, so that is exciting,” says McGeachie. “And we have a lot of expertise they don’t have, so I think there was a good opportunity to mix the two companies together and we are stronger together than we are apart.”
The Magnum Fine purchase provides two foiling machines and a cylinder die press, but only one of Magnum’s three Heidelberg Quickmaster DI presses is being set up at Mi5. The asset purchases are primarily about obtaining book of business and acquiring the well-known names of Media-Vision and J.F. Moore, which McGeachie also acknowledges to hold some risk based on the fact that many suppliers are hurt when companies wind down through either the BIA or Companies’ Creditors Arrangement Act.
“Our society over the last couple hundred of years has formulated these bankruptcy rules so that they minimize the damages essentially among all parties,” says McGeachie. “If they didn’t have this system what would the alternative be? These companies would just dissipate and become nothing and there would be no highest-bidder auction going on and there would be less money going to the creditors.”
In the J.F. Moore liquidation process, a little more than $300,000 remains owed to unsecured creditors prior to the upcoming auction process. “Unfortunately, there is a ranking of people who are owed money and banks are sophisticated entities and they secure their loans,” says McGeachie. “Then the less sophisticated guys, which includes us, essentially give unsecured loans to these companies and that is a big question in our industry. I have seen all of the suppliers tighten up and I think that is ultimately a good thing… it is dangerous when you give too much free credit.”
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