Private equity investee in receivership

Crescent Capital investee Oceania Glass is in receivership with expressions of interest for sale of the business and its assets, or a recapitalisation of the company, sought.

Oceania is the sole manufacturer of architectural glass in Australia and New Zealand and is the market leader for the product in Australia. The Dandenong, Victoria company employs 263 people.

Oceania generated revenue of $182 million in 2024 but accounts lodged with ASIC showed it made a loss of $1.23 million in the 12 months ended March 31 compared with a profit of $6.25 million in the previous year.

Delays in a decision from the federal Anti-Dumping Commission to reinstate tariffs on architectural glass are believed to have been a significant factor in Oceania’s slide into unprofitability.

The business had been expecting a decision by the Anti-Dumping Commission to reinstate tariffs on imported float glass which had been lifted during the COVID-19 pandemic. That decision has been deferred to later this year.   

The board of Oceania called in Grant Thornton on 4 February. Lisa Gibb, Said Jahani and Matt Byrnes of Grant Thornton have been appointed as receivers. They are seeking non-binding indicative offers by 21 February.

The receivers said the business has prospects for growth as it is a critical supplier for the transition to 7 Star energy efficiency double-glazing building standards. The company has the capacity to produce around 145,000 tonnes of architectural glass a year and this could be increased with additional capital investment.

Sydney private equity firm Crescent acquired Oceania, then Viridian, from CSR (ASX: CSR) for $155 million in late 2018. CSR had created the business after acquiring glass manufacturer Pilkington Australasia and DSM Glass in separate deals in 2007. CSR had paid $690 million for the Pilkington, Dandenong, production business and $175 million for Victorian processing and distributions business DSM. CSR had then invested around $150 million into improving business operations but profitability decreased as the business faced increasing competition from glass imported from China.

By the time it sold the business to Crescent, CSR had written down the value of Viridian by more than $1 billion.

Crescent generated an early return on its investment with the sale and leaseback of the Dandenong manufacturing plant and company headquarters. The real estate was sold for around $100 million to the Charter Hall Prime Industrial Fund with an eight-year leaseback arrangement. The lease represented a 5.75% yield for the fund on fixed 3% a year annual rent increases.

Crescent restructured the business into three separate legal entities, Viridian processing in Australia, Viridian processing in New Zealand and the manufacturing business, Oceania Glass.

The Viridian processing businesses in Australia and New Zealand are believed to be benefiting from double-glazing building requirements and a strong increase in construction activity in Australia. The manufacturing business, however, has been affected by aggressive pricing from Asian glass producers, especially those in China where the longstanding downturn in local construction has resulted in oversupply.  

Image: Oceania Glass is the only producer of architectural glass in Australia and New Zealand.