Australian Music Group Holdings Pty Ltd ACN 127 691 534 And Associated Entitles

38 Pages·2012·0.42 MB·English

RESTRUCTURING | CORPORATE RECOVERY | ADVISORY AND TRANSACTION SERVICES | FORENSIC ACCOUNTING
Australian Music Group Holdings Pty Ltd
ACN 127 691 534
And Associated Entitles
(All Administrators Appointed)
(All Receivers and Managers Appointed)
CONCURRENT
FIRST MEETING OF CREDITORS
Tuesday 4 September 2012

SYDNEY PERTH MELBOURNE BRISBANE
1. INTRODUCTION
Agenda
No Agenda Item
1. Introduction of Administrators
2. Concurrent First Meetings of Creditors pursuant to Section 436E of the Corporations Act 2001
3. Procedural Matters
4. Background
5. Voluntary Administration Process
6. Statement by Director
7. Update from Receiver and Manager
8. Initial Report of Administrators
9. Questions
10. Resolutions
11. Remuneration
12. Way Forward
SYDNEY PERTH MELBOURNE BRISBANE 1
1. INTRODUCTION OF ADMINISTRATORS

Who We Are
1. Ross Andrew Blakeley and Andrew Peter Schwarz are Joint and Several
Administrators, appointed on 23 August 2012.
2. Partners of Taylor Woodings and specialise in:
• Restructuring;
• Corporate Recovery;
• Advisory and Transaction Services; and
• Forensic Accounting.
3. National firm with offices in Melbourne, Sydney, Brisbane and Perth.
4. Chartered Accountants and members of Insolvency Practitioners Association.
5. Registered and Official Liquidators with ASIC and the Supreme and Federal
Courts.
SYDNEY PERTH MELBOURNE BRISBANE 2
2. CONCURRENT FIRST MEETING OF CREDITORS
This is the First Meeting of Creditors pursuant to Section 436E of the
Corporations Act 2001 of the following Companies:

Company

A. Australian Music Group Holdings Pty Ltd
B. Australian Music Group Pty Ltd
C. AMG Shared Services Pty Ltd
D. The Billy Hyde Group Pty Ltd
E. Musiclink Group Pty Ltd
F. Billy Hyde Imports Pty Ltd
G. Musiclink Orchestral Supplies Pty Ltd
H. Music Link Australia Pty Ltd
I. Intermusic Distribution Pty Ltd
J. Australian Music Pty Ltd
SYDNEY PERTH MELBOURNE BRISBANE 3
2. CONCURRENT FIRST MEETING OF CREDITORS

Company

K. Billy Hyde Music Brisbane Pty Ltd
L. Billy Hyde Music Gold Coast Pty Ltd
M. Billy Hyde Music Group Pty Ltd

N. Billy Hyde Music Adelaide Pty Ltd

O. MLA Asset Services Pty Ltd

P. Billy Hyde Music Sunshine Coast Pty Ltd

Q. MLA Services Pty Ltd

 The meetings are to be held concurrently unless any objection exists.
 Meetings for particular companies will be adjourned and re-adjourned as
necessary for passing specific resolutions.

SYDNEY PERTH MELBOURNE BRISBANE 4
3. PROCEDURAL MATTERS

No Matter
1. Nature of Meeting

2. Quorum

3. Notice Convening Meeting

4. Time and Place of Meeting

5. DIRRI

6. Entitlement to Vote

7. Adjudication of Proofs of Debt for Voting

8. Voting on Resolutions

SYDNEY PERTH MELBOURNE BRISBANE 5
4. BACKGROUND
 Australian Music Group Holdings Pty Ltd and associated entities (“AMG”) is Australia’s
largest retailer and wholesaler of musical instruments.
 AMG employs over 600 staff and has over 300 trade and wholesale creditors.
 The Receivers and Managers have control of the Companies’ businesses and assets and
any decisions regarding trading, staffing requirements and realisation of assets.
 The Receivers and Managers are continuing to trade the Companies’ businesses with the
view of selling the businesses on a going concern basis, or orderly realising all stock.
 The Administrators required to hold first meeting of creditors within 8 business days.
 The Administrators are required to investigate the Companies affairs and report to
creditors within 20 business days and hold second meeting of creditors within 25 business
days.
 The Administrators have relied on the Companies’ records. They have had limited
opportunity to verify information. Accordingly they do not warrant the accuracy of the
information presented today.
 The Administrators can provide a broad overview only at this stage, based on our initial
investigations.
 Further investigations will be conducted by the Administrators in preparing the next report
to creditors.
SYDNEY PERTH MELBOURNE BRISBANE 6
4. BACKGROUND
Trading Operations
 The current business was formed in 2010 by the merger of two long standing musical
instruments businesses, Allans Music and AMG.
 AMG has 25 company owned retail stores and four franchise stores.
 All operations are supported by centralised head office based in Rowville, Victoria.
 AMG had consolidated revenues in FY12 of approximately $109 million. Retail and
Wholesale operations accounted for $92 million and $17 million respectively.
 The wholesale businesses are the exclusive distributor of a number of world class leading
brands including Pearl, Korg, DW, Meinl, Mackie, Ampeg and Line 6.
 The wholesale businesses sell to Allans Billy Hyde and approximately 300 independent
stores.
 Revere Capital Pty Ltd (“Revere Capital”) is the major security interest holder taking an
assignment of the debt owed to National Australia Bank Limited (“NAB”) in March 2012. The
debt owed to the NAB at the time was circa $56 million. The debt was purchased by Revere
Capital for $8 million.
 Revere Capital has a cross collateralised charge over the Companies in the group and are
claiming $20 million plus the advances of $7.1 million.
SYDNEY PERTH MELBOURNE BRISBANE 7
4. BACKGROUND
Material Events Leading up to Appointment

Dates Events

2005 Current Directors purchase 8 Allans Music stores.

2007 Interests associated with Crescent Capital Partners acquire majority of AMG business for net $50m

July 20 10 Allans and AMG merge. Directors own 20% of shareholding at this time. Crescent Capital Partners own
70% and 10% owned by minority shareholders

Januar y 2011 Wholesale business loses four agencies to competitors
Decem ber 2011 Crescent sell shareholding to current directors for $1

March 2012 Revere Capital purchase debt owed to National Australia Bank Limited who was owed circa $70m for $8m.
Directors request immediate injection of $7m working capital from Revere Capital
March – Aug 2012 Revere Capital injects working capital : 15 March $3m; April $1m; 22 May $2m; 2 Aug $1.1m

29 June 2012 Revere Capital acquires 100% of the shares and forgives $52m of debt.

30 June 2012 Revere Capital issues 20% of shares to Directors.

10 August 2012 Revere Capital decide not to advance $1.5m for requested stock build

10- 21 August 2012 Directors prepare and distribute Information Memorandum for sale of businesses. Directors in discussions

with a number of parties

22 August 2012 Revere Capital demand payment of full debt owed

23 August 2012 Directors appoint Voluntary Administrators

23 Aug ust 2 012 Revere Capital appoint Receivers and Managers

SYDNEY PERTH MELBOURNE BRISBANE 8
5. VOLUNTARY ADMINISTRATION PROCESS
Objectives of Voluntary Administration
Objective

Maximise the chance of a company, or as much as possible of its business, continuing in existence

OR

If that is not possible, results in a better return for the company’s creditors than would result from an
immediate winding up
Voluntary Administration Process
Process
 Directors powers suspended
 Moratorium on creditors claims
 Breathing space to enable the Administrators to explore alternatives and recommend best way
forward
 Administrators are independent and required to investigate the company’s affairs
 Administrators issue Report to Creditors summarising options and recommendations
 The Report tabled and Creditors decide company’s future at a second meeting
 Administrators’ role limited due to the appointment of Receivers and Managers who have sole
control over the businesses and assets of the Companies.
SYDNEY PERTH MELBOURNE BRISBANE 9