Jan 23, 2014

The real ‘sideshow’ - is it PaperlinX or its Hybrids?

To date, the off market takeover of the hybrids has cost PaperlinX an estimated $41 per unit acquired; but more about that later.

The sideshow being played out by PaperlinX

Late Tuesday evening, 21 January, 2014, it was incorrectly reported  "Paperlinx to close hybrid offer next month". The report was attributed to comments made by Andrew Price from Dublin.

This was immediately countermanded by PaperlinX in an ASX announcement early Wednesday morning.

Thursday’s The Australian reported: PaperlinX hybrids a ‘sideshow’. Both pieces were by the same reporter. 

Presumably these articles were published with the consent of Andrew Price who is liberally quoted in both.

In the Notice of 2013 AGM, the Director’s recommendation for voting against the election of a fourth director, item 3.2, included the words “Your current Board of three Directors is very cohesive …”

These three announcements within a week suggest a lack of cohesion. This is a worry.

The hybrids have always been the main event. 

Here are 10 reasons:

(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".

Jan 21, 2014

Andrew Price has a dummy spit

Enquiring minds may care to consider this irrational outburst published overnight by Business Spectator:  

Why would Andrew make such irrational and inflammatory statements? 

Some juicy extracts appear below:

“The main game is fixing the business,” Paperlinx chief executive Andrew Price told DataRoom via phone from Dublin. “The hybrids are a sideshow and I’m frustrated by it because it takes away valuable management time and resources.”

Andrew, PaperlinX made the offer (250:1) after its board failed to negotiate in good faith with key hybrid holders. It’s the board that’s wasting time and money by making stupid offers.

“I can’t see any other alternative in the short to medium term for the hybrids than the one we have proposed,” says Price.

“Ordinary shareholders will not want to give up more of the company.”

Why not face reality? Read your balance sheet.

“The share price is severely depressed by the hybrids and is not getting a lot of institutional support,” says Price.

The truth is that the share price is severely depressed by the board’s failure to properly address the hybrids.

“It’s my personal opinion that the shares would double or triple in value if we got rid of the hybrids.”

Too right, but you are dreaming if you think 250:1 is the answer. 

And, why was it necessary to make this announcement from Dublin?


PS: Just before 10 am PaperlinX made an ASX announcement that included this curious statement: 

"Despite certain media reports overnight, PaperlinX has not made any decision about whether the Offer will be extended beyond 28 February 2014 or whether it will close at that time."

Hmm, mixed messages from the board.

Jan 6, 2014

Important update on PaperlinX & PXUPA

Dear all

Within minutes of posting Who’d want to be CEO of PaperlinX? there was an ASX announcement that Coastal Investment Management and its affiliates ("Coastal") had moved to holding 19.16% of PXUPA.

Its probably no coincidence this has occurred in the middle of the off market takeover offer of 250 PPX per PXUPA.

Does anyone reasonably believe that Coastal made this strategic investment to acquire PPX shares on a 250:1 conversion? 

$9.00/250 = 3.60 cents versus PPX 's current market price of circa 4.60 cents. This is a discount of 22% and with priority to boot. A good deal.

Where to from here?

In the closing of Who’d want to be CEO of PaperlinX? I suggested that:

"something financially meaningful needs to happen at PaperlinX very soon."

Coastal at 19.16% is externally meaningful. What will we see that is internally meaningful?

Some points to ponder:

  • Coastal has the financial strength to challenge PaperlinX and the RE, if that is what it chooses to do;

  • PaperlinX will soon release its HY 2014 results. It's well known around the traps that the results in the UK will be a shocker;

  • Andrew Price is probably near the end of his honeymoon period, possibly evidenced by the very public comments of his largest shareholder in Who’d want to be CEO of PaperlinX?;

  • PXUPA holders may be blessed with a change in the ultimate ownership of its responsible entity and a change of the Compliance Committee, both occurring on 18 December, 2013 (more about that soon); and

  • Most importantly, enquiring minds may like to consider Coastal's exit strategy. Hedge funds don't buy and hold. They're there for a good time, not a long time.

Change is rapidly afoot. Priority ultimately wins in commercial battles.

Perhaps the board of PaperlinX ought to revisit this poll and accept that the responsible thing to do is accept the majority view.

Over to you chairman Kaye. Time for an urgent inquisitorial resolution.

Who’d want to be CEO of PaperlinX?

Beautiful CEOs boost share prices

study published by The Telegraph on 3 January, 2014, finds 'beautiful' CEOs boost stock prices. 

Just so there are no misogynist or sexist comments; ‘beautiful’ is defined by a ‘facial attractiveness index’ and is unisex.

Call for serious financial commitment by CEOs

Simon Marais, MD of fund manager Allan Gray (formerly Orbis), was reported in the Australian Financial Review on 3 January, 2014, as saying: 

“If you want to be a CEO you should have at least half of your wealth in the stock of a company – and you can’t sell it for 10 years. If people don’t like it, then let someone else have a go.” 

So what? 

  • Allan Gray is the major shareholder in PaperlinX with 18.3%; and

  • Simon Marais is probably the highest profile activist investor in Australia, and he doesn’t shy away from the title "Simon Marais the CEO slayer". 

Does this signal a change of support for the board of PaperlinX by Simon Marais? 


If Andrew Price was to commit half of his wealth to PaperlinX it would transform the business overnight.

Imagine if this guy was CEO?

Of course neither is going to happen, but something financially meaningful needs to happen at PaperlinX very soon.

Coming Blogs

  • Review of the "futile" meetings to amend the Constitution of the SPS Trust; and

  • Review of the 250:1 takeover offer

Jan 1, 2014

An avalanche of votes ... 1.2% ... whoopee

PaperlinX today announced acceptance of its pathetic offer (250:1) by holders of 34,738 units only. This gives it 1.2188771% control of the PaperlinX SPS Trust - to date. 

Yep, it needed 7 decimal places. 

Previously it was  just 0.000035% (or one solitary miserable corrupted vote).

Congratulations on a job well done. An avalanche of acceptances at a minimum cost of circa $2.4 million. 

This board and its advisors are dullards. 

How embarrassing. To be hoped the average cost per unit acquired falls below the current $69 each.

Dec 20, 2013

Farewell Delivery Company, welcome to ...

Welcome to PaperlinX Logistics' Services.

In an announcement to UK staff on 16 December, 2013; John Ball, Director, advised that the Delivery Company will be re-branded as PaperlinX Logistics Services (sic) with effect from
1 January, 2014.

“In all other respects it’s business as usual.”

Two issues here:
  1. Surely he means PaperlinX Logistics’ Services; and

  2. There was no mention of DHL.

Oh, I should have mentioned that the memo was headed “For internal communication only”. It just fell into my email inbox.

This seems another waste of time and money (WOTAM) - same trucks and staff, but different livery. 

If there is any logic in this re-branding please tell everyone what it is; including Aussie investors.

From afar it does seem Marchantesque; but there may be a plausible reason beyond the memo from John Ball.

We wait in anticipation.

Dec 17, 2013

"there is nothing more deceptive than an obvious fact" - Sherlock Holmes

This blog addresses a few obvious facts as we prepare to say farewell to 2013. 

It's been an annus horribilis.

More to follow soon, including a report on the three class meetings held in Sydney on Tuesday - unless I'm prevented by threat of litigation.

I hear that MD Price has been talking tough about the hybrid holders from the safety of the UK. 

Something along the lines of: 

“the hybrid shareholders will get what’s put in front of them and nothing else”. 

Heroic but foolhardy.

His statement is a self evident truth. What is more truthful is that the hybrids' enshrined priority ensures they will always get much more than the ordinary shareholders.

The above quote was apparently made on the eve of the Target’s Response in which the Responsible Entity (RE) emphatically advised PXUPA holders NOT to accept the 250:1 offer. 

It didn’t take a Rhodes Scholar to realise that. 

For the unbiased record, the RE advises that upon three (3) events; the hybrid holders are entitled to 54% under one scenario and greater than 90% under the other two. Which is the winner - certainly not 54%. Check out page 9 of the Target's Response. 

With PPX at 5 cents, that implies a conversion ratio of circa 2,000:1 - well above 250:1. Now we have the RE and PaperlinX PIGS in agreement on the facts of conversion.

The PaperlinX board is comprised of three really smart individuals currently acting otherwise. 

Robert Kaye SC is LLB (Syd), LLM (Cambridge) (Hons) while Michael Barker is MA (Oxon), FIAA, FIA and is a life member of the Institute of Actuaries of Australia.

Andrew Price is a graduate of the school of hard knocks summa cum laude, meaning with highest honour, which simply means he’s made a lot of money with little formal education. Good on him.

Sadly, none of the current board are experienced in running a troubled global industrial company in dire financial straits.

Why can’t this board understand an obvious fact of a corporate turnaround - they need to bring everyone along; in addition to their mates and the fee gougers?

Gentlemen, you are now working for the hybrid holders but mistakenly believe otherwise. 

Corporate life's a stage,
And all the chairmen and directors merely players:
They have their exits and their entrances …

Remember $14?

PPX closed at 4.3¢ on Monday, Tuesday and Wednesday.

This is a 17 month low and approaching the all time daily low close of 4.1¢ of 17 July, 2012. 

PXUPA closed at $9.00 on each of these three days.

4.3¢ x 250 = $10.75 of “implied” value which the real market is now discounting to $9.00 cash. 

The Bidder's Statement is now a $2.5 million folly. How much toilet paper would this buy?

Unfortunately paper wholesalers didn’t get a jersey in the top 1,000.

More soon.

Dec 10, 2013

It’s time PaperlinX got its act together

Investor feedback on the proposed amendments to the Constitution 

One of the very few joys of convening a shareholders’ activist group is feedback from co-investors; and paper industry professionals who intimately understand the issues at PaperlinX.

Yes, the leaks still occur.  I don’t publish most of them as I sincerely wish PaperlinX to prosper to everyone’s mutual benefit.

BUT, the unitholder Booklet regarding the proposed amendment to the constitution of the PaperlinX SPS Trust takes first prize for serious feedback by concerned investors.

One gentleman telephoned to say he considered the Booklet was deliberately designed to be confusing to retail investors. 

Yesterday I modestly said it was “daunting”. You get the message. 

It probably presages a poor retail turnout upon which PaperlinX may gloat about a low “For” vote; until the equally daunting 93 page Bidder’s Statement confuses the same retail investors delivering an equally poor retail response which certainly won’t suit PaperlinX.

Another gentleman wrote a detailed email. I’ve never meet him but we’ve spoken a few times and he is a seriously qualified retired professional.

His email is published with consent. Only the opening paragraph has been deleted for the purpose of anonymity.

"We do wonder how many PXUPA holders will be influenced by the RE’s recommendation to vote against the resolutions. 

At the very least, the RE should not have made any recommendation. “For” is the only means of letting PaperlinX know what we think of the immoral, if not unconstitutional, power vested in PaperlinX through the one, just one, ordinary unit. That power should be challenged but the cost of a challenge would be enormous with the lawyers the only certain winners. 

How many investors were aware of the import of that provision in a prospectus that no individual could possibly read and comprehend? Retail investors can’t understand all the gobbledegook and take comfort from the book builders, the big guys.

It is fascinating to find that the RE is paid by PaperlinX and not out of the Trust. When I think about that, the SPS Trust did not have its own funds. It was only the post box for share dividends from PaperlinX to the PXUPA holders. The payments, it now seems to me, were unfranked dividends, not interest as we had thought from the way the payments were expressed.

I also wonder what Newgate Research reported back to PaperlinX and whether its report has exerted any influence on the way that PaperlinX treats PXUPA.

I fear that all this is useless speculation and that the offer will be 250 for one with no embellishment. I don't think any PXUPA will have to accept what is offered but I fear that those who do not accept will be left in a wilderness without water.  Nevertheless, if enough accept the offer, the dividends on the remainder, the continuing PXUPA, might well become manageable for PaperlinX.

The window is very dirty and I cannot see through it.

We need PIGS for quite a while yet.



It’s time PaperlinX got its act together

It’s revealed in the Bidder’s Statement supporting the off-market takeover bid for PXUPA, page 57 of 93, that Newgate Communications, referred to above as Newgate Research, will be paid $110,000 exclusive of GST for its services as “communications adviser”. To the outside world this comprised two meetings each of nine PXUPA investors in Sydney and some telephone polling in other States.

The total costs of the Offer, that’s the 250:1 offer, are expected to be $2.1 - 6.4 million depending on the level of acceptances of the Offer.

Moelis & Company must have a lot riding on this deal.

Suggestions to PaperlinX

Start thinking and stop being adversarial.

Try being nice to those that keep your balance sheet afloat and discontinue this irresponsible largesse in favour of fee gougers. 

If you really wish to waste another $2 million, go find another Canterbury Packaging. 

Dec 8, 2013

0.000035% = voting control. Is this equitable?

Dear PXUPA Investors 

Please vote in favour of both resolutions, nominating the Chairman as your proxy if unable to personally attend on 17 December, 2013.

This blog relates to a proposed amendment to the constitution of the PaperlinX SPS Trust (“the Trust”). 

The unitholder Booklet (“the Booklet”) is a daunting document of 28 pages. 

It’s also irrefutably demonstrates the continuing bias of The Trust Company (RE Services) Limited, the responsible entity (“the RE”) of the Trust in favour of PaperlinX Limited.

Our RE is paid by PaperlinX Limited under a secret services agreement. Go figure the equity and honesty of this arrangement.

The Requisitioning Members, detailed on page 3 of the Booklet, requested a General Meeting of unit holders of the Trust and nothing more.

There are 2,850,001 units in the Trust, comprising:

Ordinary Units –  one only unlisted unit held by PaperlinX Limited; and

2,850,000 SPS Units, PaperlinX Step-up Preference Securities in the Trust, represented as a listed security on the ASX as PXUPA.

This means that PaperlinX Limited holds just 0.000035% voting power, all things being equal. But we know that equality and equity are missing in the management of the Trust by the RE.

The RE has decided, no doubt with professional advice paid for by PaperlinX Limited, that there should be three meetings of members of the Trust:

  1. A Class Meeting of the holder (PaperlinX Limited) of the sole Ordinary Unit. We already know the outcome of that meeting; and

  2. A Class Meeting of the holders of the 2,850,000 SPS Units (better known as PXUPA investors). This vote in favour of the proposed amendment will the interesting vote; and

  3. A General Meeting of the 2,850,001 members of the Trust. This vote in favour should be the same as #2.

Just how biased can an “independent” RE be?

As described in technical detail in sections 1.1 through 1.12 of the Booklet, the RE explains its view about the deficiencies in the proposed amendment of the constitution and why members should vote against all three (3) identical resolutions at the three meetings.

The tone of this material attempts to show the RE as being considered, independent and totally reasonable; but regrettably that is far from the truth.

A review of the key dates and actions of the parties supports this assertion.

30 September, 2013: The Requisitioning Members requested a General Meeting of members of the Trust. This ASX announcement included the incredulous statement: “The RE is considering the validity of this request and will update the market as appropriate”. 

This consideration took the statutory maximum allowed period of 21 days.

18 October, 2013: PaperlinX Limited announces a proposed takeover offer for the Trust.

21 October, 2013: The RE announces to the ASX its determination to hold two additional Class Meetings immediately prior to the General Meeting on 2 December, 2013.

22 October, 2013: After the “the event” and in private correspondence with a representative of the Requisitioning Members, the RE initiated dialogue advising of a technical fault in the original requisition and suggested alternatives.

Don’t you find this curious? On 21 October, the RE had publicly bended to the wishes of its paymaster, yet one day later it’s acting in a conciliatory and supportive role with the Requisitioning Members suggesting a variation to the request for a General Meeting alone 

4 November, 2013: An announcement to the ASX advising of a new resolution by the Requisitioning Members, following the above advice and guidance by the RE.

Is this fee gouging by the RE? PaperlinX now publicly complains about wasting time, resources and money by the Requisition Members.

There is a strong counter argument about holding three meetings

The five Requisitioning Members personally provided a legal fighting fund seeking advice from a leading Sydney legal firm, Piper Alderman, which had previously provided pro bono advice to us generally. 

There has been legal argy-bargy about the need for three (3) meetings between Piper Alderman and solicitors for the RE who of course are ultimately funded by PaperlinX Limited.

Isn’t his cute? PaperlinX consumes valuable funds fighting its major equity holder over a minor change to a constitution? I say too cute by half.

Be assured there is a strong legal argument against the need to hold three meetings.

There is hope for PXUPA holders on many fronts

One day someone in authority will understand that 0.000035% isn’t a controlling stake in anything.

On 4 December, 2013, the RE’s ultimate owner transferred from The Trust Company Limited (TRU), now delisted, to Perpetual Limited (PPT).

I’ve already written to Perpetual expressing concern about the fiduciary obligations of its newly acquired subsidiary, our RE.

Please vote in favour of both resolutions.

Dec 2, 2013

Good riddance to Trust Co as Responsible Entity of PaperlinX SPS Trust

Posted 3 December, 2013                   

The Supreme Court of New South Wales this morning approved the Scheme of Arrangement under which Perpetual Limited (PPT) will acquire all the shares in The Trust Company Limited (TRU).

The last day of trading of TRU on the ASX will be Wednesday, 4 December 2013.

What does this mean for PXUPA holders?

The responsible entity for the PaperlinX SPS Trust still remains The Trust Company (RE Services) Limited but ultimate ownership will move from TRU to PPT.

Will PXUPA holders get a better deal under this new ownership? 

Who knows but it couldn’t be worse than that endured under the stewardship of the soon to be defunct The Trust Company Limited.

Perhaps, hopefully, the new owners of our responsible entity will appreciate that words alone are futile. 

Perhaps they will have the guts to stand up to PaperlinX Limited. Saying "No" isn't that hard.

Here is a sample of the nonsense pedalled by Trust Co.

"Trusting someone to manage your wealth, whether you’re an individual, an intermediary or an institution, demands faith and confidence. We know that trust can only be earned and that is why at The Trust Company our personal relationships with our clients remain as central to our business as they did with our first clients more than a century ago."
What a pathetic joke.
I say good riddance to Trust Co. You've been a great disappointment to PXUPA investors.

Dec 1, 2013

If you think PaperlinX has problems, read this about Antalis and Arjowiggins

Sequana, the owner of paper merchanting group Antalis and paper manufacturer Arjowiggins, is facing a potential €578m (£484m) lawsuit after a High Court ruling against a company it previously owned.

More courtesy of PrintWeek.  Gulp!

Nov 29, 2013

St Andrew's Day at PaperlinX and still no Bidder's Statement?

The Scots have a proud history of fighting for freedom - happy St Andrew’s Day.

At the 2013 AGM the chairman said of the proposed 250:1 takeover offer for the hybrids:

“Details of the Offer were published in a statement to the ASX on 18 October 2013, and a Bidder’s Statement is expected to be dispatched to Hybrid holders in November.” 

Today is November 30, six weeks later and coincidently St Andrew’s Day, and what do we have?

A couple of invitation only meetings in Sydney on Wednesday, November 20; and as recently as Thursday, November 28, we have a reliable report of telephone polling of Melbourne hybrid holders. This time there was no fee of $150.

Given the hype about the capital structure at the AGM something must be amiss, but not sufficiently so to necessitate advising the market. 


St Andrew is the patron saint of Scotland.

He is also the patron saint of Greece, Russia, Romania, and Barbados. 

His patronage extends to fishmongers, gout, singers, sore throats, spinsters, maidens, old maids and women wishing to become mothers, all deserving causes - though he forgot about the PXUPA hybrid holders.

But there is hope in the image above. Look carefully at the engraving.


One day the hybrid holders will break free of the unconscionable behaviour of PaperlinX and the tyranny of a grossly conflicted Responsible Entity.

This St Andrew has styled himself as the saviour of print* not just a paper merchant, but he too now chooses to forget about his hybrid holders. These saints are a forgetful lot.

* I don’t make these things up; I simply report what’s in the public domain.

The board of PaperlinX also forgets. 

poll was taken by PIGS back in early June, six months ago. The PPX scrip for PXUPA hybrid resolution to the capital structure problem ranked #3 - with just 17% of the total votes.

Happy St Andrew’s Day from Australia.

Nov 26, 2013

Amending the Constitution - interim advice to PXUPA investors

Dear PXUPA hybrid investors

We are currently seeking advice on the contents of the Unitholder Booklet dated 22 November, 2013.

The results of this advice will be published soon.

Stay tuned.

Nov 20, 2013

What a shemozzle. 250:1 won’t work

A brief summary of the PaperlinX sponsored selective meeting of PXUPA holders held in Sydney at noon, Wednesday, November 20, 2013.

  1. Newgate Communications was highly professional and no PaperlinX representatives were present. It was a genuine “research” session.

    That’s the first and only positive.

  2. No one wanted to accept 250:1. This offer is dead in the water at a retail level.

  3. All present wanted “someone” to press for a better deal – who could that be? Further negotiation was called for and PIGS was considered the logical entity to negotiate on behalf of retail investors.

  4. Many present questioned the role of the Responsible Entity, The Trust Company (“TRUST CANNOT BE DEMANDED, IT HAS TO BE EARNED”).

  5. All present understood they’d bought a debt instrument and required a premium to change status.

  6. There was a cool to luke warm response to the 250:1 conversion with options kicker published by PIGS.

  7. These folk bought debt and don’t want an equity position in PaperlinX.

  8. One respondent wouldn’t be surprised if the 250:1 offer is rescinded.

Long Shots

Old Rowley won the 1940 Melbourne Cup at 100:1 as a 7 year old gelding with gammy legs. His previous win was at Randwick in April, 1938
 - 30 months earlier.

If you’re a Melbourne Cup tragic, here is the 1940 race - a turf sensation.

Old Rowley was at shorter odds than PaperlinX’s “derisory” offer of 250:1. Old Rowley won but PaperlinX won’t. Maybe a late scratching at the barrier is possible.

Contrary to the arrogant nonsense pedalled by PaperlinX, PIGS had supporters (plural) at this exclusive meeting of nine PXUPA holders. 

We have supporters across all demographics.

The Facts in More Detail

Each attendee was paid $150 cash in hand and got sandwiches to boot. The meeting was recorded.

There was no commitment to confidentiality – hence this blog. 

At the noon meeting, 8 of 9 attendees were original subscribers at $100; the other paid $30.

This was a “selected” group. Any suggestion that the choice was random is utter nonsense and statistically invalid. Further, I’m aware of larger holders who attempted to gain admission and were refused.

The attendees were from Sydney’s “better” suburbs, mainly retired professional/business people, and one public servant, and communicated by given names only.

The meeting was chaired by a lady from Newgate who was well versed in communication and completely impartial. As an aside, London based Newgate Communications  was only established in Australia on August 6, 2013. 

There was a series of True/False questions which seemed irrelevant to the concerns of attendees.

The attendees were well versed about investing generally but some initially had limited knowledge about the unconscionable attributes of the PaperlinX hybrids. Apparently this was rectified as the meeting progressed. This was a negative for PaperlinX. 

Words like “outrage” and “derisory” reflected the mood of the meeting at its close.

Everyone in attendance believed they had bought an instrument of debt, not equity; and don’t wish to exchange prior ranking debt for equity. That was a strong message.

One attendee, a retired medico, believes he has been the victim of negligence by professional advisors. Just what was the brokerage paid to flog PXUPA? 

Here's what PaperlinX conveniently ignores

The scourge of inflation affects all retirees who are now living longer.

Assuming a CPI of just 2.50% pa, it depends upon where you live and how you choose to live; $100 invested in March 2007 is now equivalent to $118. 

At 3.5% CPI, the figure is $125,

This makes an implied $14 of questionable equity a joke and the attendees understood this.

Nov 19, 2013

continuing of tough times for printing - report

“We’re also going to see a continuing of tough times for printing. I think the volume of printing is falling in a real sense and the cost to compete in that industry is also becoming higher.”

An extract from Automotive, manufacturing, printing and retail businesses besieged by debt: Grant Thornton report published today by SmartCompany.

psst - $150 cash for your opinion

Did you miss the PaperlinX sponsored “invitation only” meeting of selected retail hybrid holders in Sydney on Wednesday, November 20?

You also missed out on the $150 attendance fee. 

Be sure to read More Carrot Required. 

Glad to see PaperlinX is finally attempting to communicate with its hybrid holders, but why so secretive, unrepresentative and expensive; and why the $150 cash inducement?

The Bidder’s Statement is due in November and this meeting was convened for November 20. That’s a bit odd. 

An inexpensive survey could be undertaken with an on line poll like the one below published by PIGS in June 2013 – Fixing PaperlinX.

This poll is still open if you wish to express your opinion. Note the poll results. 

Converting the hybrids to ordinary shares ranked #3. Surely this sample of 214 is a better statistical guide than the reported 18 small investors in metropolitan Sydney?

For a modest fee, PaperlinX PIGS would have gladly managed the process using its qualified list of engaged investors.

For the record, PaperlinX PIGS has been in existence for nearly two years, has registered investors representing more than 25%, but less than 50%, of the PXUPA register and has a record of constructive opinion about how to resolve PaperlinX’s hybrid problem.

Successive chairmen and boards have been “kicking the hybrid can down the road”. The problem is now serious. The board now needs to resolve its capital structure.

It’s been serious for PXUPA investors denied five successive distributions totalling $18.7678 per PXUPA. 

The missed distributions since June 30, 2011, $53.5m in total, now exceed the market cap of PXUPA!

Subtracting that sum from the balance sheet equity attributable to the ordinary shareholders leaves them with a mere $23.2m
(+85.2 +276.5 -285.0 -53.5) of honest equity, refer p 22 of the 2013 Annual Report. 

Here’s the recent record of communication between PaperlinX and its largest block of hybrid holders, PIGS:

1. There was a meeting scheduled in Melbourne for August 15, 2013. The five members of the PIGS committee, PaperlinX and Moelis were to attend. It was abruptly cancelled by PaperlinX on August 7 soon after our webinars were announced on August 5.

Imagine a senior counsel objecting to freedom of speech.

These webinars are still available on youtube. Pre-Result Update, on 13 August, 2013 and FY2013 Analysis Update on 27 August, 2013.

2. There was a meeting in Sydney on September 3, 2013. In attendance were the two Sydney based PIGS committee members, PaperlinX and Moelis. A full report is available at Position Paper on Conversion.

It was a short meeting; PaperlinX offered 40% for a share conversion whereas PIGS sought 78.8% as per the balance sheet equity as at June 30, 2013.

3. On October 18, 2013; PaperlinX announced an indicative 250:1 offer which if fully accepted represents a 54% “whole of Company offer”.

The problem now faced by this board is that the profile of the PXUPA register has changed dramatically over two years. As at August 23, 2013, 50.30% of the total hybrids on issue are held by just 32 investors. Check out Endgame.

Why bother holding expensive private meetings with a few small holders.

More Carrot Required provides an attractive inducement for hybrid conversion at 250 :1, and does not disadvantage the ordinary shareholders. 

Another constructive solution designed to help the board resolve its problem. We shall see.