(1) The hybrids have existed since March 2007; long before Andrew Price revealed his hand in February, 2012. The hybrids are not new; it’s just that the holders are becoming more organised and vocal.
(2) PaperlinX has fallen from a blue-chip ASX 100 member in 2007 to a penny dreadful stock today. This $285 million debt obligation is now of real concern to many stakeholders, including ordinary shareholders.
(3) Most analysts agree that but for the hybrid equity in the balance sheet ($285 million) and PaperlinX’s failure to pay the past five distributions totalling $18.7678 per PXUPA or $53.5 million then PaperlinX wouldn’t exist today.
Note that these figures apply to a period when floating interest rates have been at 30-40 year lows.
(4) In early September PIGS published a Position Paper on Potential Conversion of PXUPA into PPX ordinary shares. It’s worth revisiting to understand the utter futility, and waste of resources, in making the 250:1 offer.
(5) As at 30 June, 2013, the hybrids constituted 78.8% of the net equity of PaperlinX and hold priority as to capital and income. Informed hybrid holders are in no mood to surrender priority.
(6) Accordingly, I sincerely hope Andrew can “fix the business” as it improves our security.
Meanwhile Andrew should be grateful that the hybrids exist to allow him this opportunity.
(7) It must now be obvious that Andrew Price will get to exercise few, if any, of his options until the board resolves the capital structure – which necessarily includes the hybrids.
(8) As for waste of “valuable management time and resources” as at 20 January, 2014, the Offer has secured just 61,116 SPS Units (PXUPA) at an estimated cost of $2.1 - $6.4 million (Bidder’s Statement, page 57). Allowing for the inevitable overruns, let’s say $2.5 million or $40.91 per PXUPA acquired to date. Talk about waste!
(9) It’s now obvious after two years, since February 2012, that Andrew Price and his supporters always intended to screw the hybrid holders.
(10) The argument of basing the Offer on relative market caps, both currently circa $27 million, is spurious. It conveniently ignores the face value of each hybrid ($100) and the hybrid priority over ordinary equity.
"You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time".