But in February, it renegotiated its borrowing facilities with BNZ – a move that was supported by a shareholder capital raise and the delivery of a profitable performance.
Of the $700,000 the business raised, it had received $335,000 before the end of March 31, and expected the remainder to be settled monthly after the balance date.
Its new borrowing facilities with BNZ included a reducing loan of $1.75m that is set to drop to $870,000 by January 2027 and an overdraft of $750,000 is also in place until January 2027 but repayable on demand.
As of March 31, the company had borrowing facilities of $2.5m with an undrawn balance of $1.4m.
“The facility and covenant headroom under the new borrowing arrangements continues to be sufficient based on the group’s latest budgets and forecasts for the period to March 31, 2027,” the company said in its statements.
“Based on these budgets and forecasts, the board of directors believe that it remains appropriate to prepare the financial statements on a going concern basis.”
A Paper Plus spokesman said the group was confident the $700,000 would be enough to keep the group afloat.
“There is also an expectation of continued reduction in bank debt,” the spokesman added.
As part of its negotiation with BNZ, the co-op received a waiver of its interest cover covenant for the June 2024, September 2024 and December 2024 quarters.
The interest cover covenant as of March 31, 2025 was met with sufficient headroom and the debtor covenant was met in each quarter of the 2025 financial year.
The board noted that its budgets and forecasts were sensitive to a range of changes in its assumptions, including sales volumes, the performance of its e-commerce store and timing of collections and payments.
“But it is the board’s view that its budget is reasonable and achievable.”
The company was planning to undertake a number of initiatives to strengthen its financial position, including growth in online sales and a reduction in expenses.
The spokesman wouldn’t comment on what this included, citing commercial sensitivity.
Its largest expense is wages and salaries, which were already down from $4.558m to $3.83m in FY25.
But the group’s spending on computer, phone and IT costs rose from $1m to $1.4m.
Total directors’ fees fell from $468,000 to $397,000.
The group currently has 88 stores but is forecasting this could be down to 71 within five years, based on historical trends and potential macro-economic challenges.
This would have impacts on its levy income and central purchasing abilities, which would in turn impact supplier income.
The spokesman confirmed the projection was over a five-year period ending in 2030 for the purpose of goodwill valuation assessment, but reiterated this was the worst case scenario, not the most likely.
He declined to comment on what potential macroeconomic challenges the business had factored into its assumption.
The business has 84 shareholders listed, with the largest, Hodgetts Holdings, owning 3.04%. It operates the Paper Plus in Stratford and Hawera stores.
Ōrewa Stationery Supplies is the second-largest, with a 2.56% shareholding.
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.
