Boon a goner as Orbis backs Price

Posted 19 February 2012                                                Twitter: @PaperlinXsux

Recent Postings

·        Where are the Europeans at the board table? - click here 

·        Shareholder Alignment: PaperlinX vs Antalis
(or eunuchs masquerading as warriors) - click here

·        Harry Boon: Corporate Recidivist - click here  

·        This is Priceless ... it’s all Boon - click here

·        Boon faces defeat - click here 

Coming Soon

·        An open letter from PIGS to Andrew Price and Harry Boon, with their responses, will be published soon.

·        If retailers only prosper with a retailer at the helm, what does PaperlinX need to succeed?

·        Results of NTA competition to be posted Wednesday night

Week #14 in Review

1.    Orbis confirms backing for Price 

2.    Boon faces personal dilemma, or has a deal been done?

3.    How will Harry vote?

4.    Rumour mill

5.    Where we stand on Boon

6.    What did Mr Market say last week?

7.    Yes Minister, coming to you live at PaperlinX

1 Orbis confirms backing for Price

As reported in the AFR today. Click here. This probably accounts for the strong performance of PPX and PXUPA on Friday.

I’m surprised to see Orbis commit so early. Maybe the real reason is not so obvious. 


Looks like a face saving deal has been done. Simon Marais, MD of Orbis that has lost $70 million [its biggest loss ever] is reported as saying in the fourth paragraph of the AFR article:

"I don’t think Harry has done a bad job," Mr Marais said.

You must be kidding! Orbis was selling PaperlinX in April 2010 then resumed buying soon after Toby Marchant was appointed in October 2010. 


Harry Boon is the Captain Schettino of paper merchanting. 


Check this chart of PaperlinX with Orbis' share purchases highlighted. You must be joking Simon. 9.5 cents is better than 6.5 cents at January 13, but is still a very long stretch from 69.4 cents.


To be hoped that the Orbis support for Price doesn't involve screwing hybrid holders again.

2 Boon faces personal dilemma, or has a deal been done?

Does he stay and fight, or use release of this week’s interim results and strategic review as a basis for a dexterous departure?

It wouldn’t be hard to spin that approach, but it’s his last chance of a dignified exit from PaperlinX.

An early retirement could be sold as

bringing forward his previously planned transitional role, from the old to the new. In 2011 he only took on the chairmanship as a matter of duty as the longest serving director etc etc.

The curse of noblesse oblige etc etc.

If he chooses to fight, popular opinion is that either way he eventually loses; as an unlikely or narrow win only brings on the next challenge of a maimed leader.

It’s highly irregular for a chairman to be challenged; if they must go it’s usually a ‘tap on the shoulder’. Challenges are undignified anytime, let alone within six months of appointment.

However he is the longest serving director and must accept responsibility for the Company’s current appalling position.

3 How will Harry vote?

He could “do a Gorton” i.e. vote himself out, which would be preferable to “doing a Holt” or “doing a Snedden”. Offshore readers will need to research these. Enjoy.

4 Rumour mill

1.    I’m advised that PaperlinX has now implemented monitoring of all incoming and outgoing emails. The official reason given for this draconian step, at this time, is “insider trading”. What a relief, I thought it might be something serious. Problem is that it doesn’t stop leaks by SMS, phone or home computer.

2.    When did private equity start sniffing around Paperlinx. I’m told there was a PaperlinX Data Room established around August 2011, which predates official releases to the market by a long while. Probably wasn’t material.

3.    Meanwhile Mr Market is predicting a Boon defeat at the EGM, see Mr Market below.

4.    PaperlinX’s offshore senior executives started arriving in Melbourne last week for Harry’s farewell party the interim results, the long awaited Strategic Review and brainstorming about Harry Boon’s defence of his unfortunate dual chairmanship of two ASX companies. If you missed this problem Harry Boon has, click here  then scroll down to Harry Boon's Directorships.  He is defending the indefensible.

5.    If shareholders want to chat with Toby Marchant I believe he’s at the  Langham Hotel tel 03 8696 8888 or fax (03) 9690 5889 may be easier as he’s having calls screened. Golly, the whole company is in lock down.

6.    PaperlinX obviously hasn’t breached its banking covenants; otherwise this would have been released by now. This probably accounts for the strong market in PPX and PXUPA on Friday following a couple of subdued day’s trading midweek. It also probably means it could have paid the Dec 2011 distribution.

7.    Busy week is coming up for Harry Boon with a tight interim results schedule, and that’s before anything else blows up at PaperlinX.

Date	Coy	Role	Events
Wed 22 Feb	PPX	Chairman	1.    Interim Results 2.    Release of Strategic Review of Business and Capital Structure 3.    Briefings with non-resident CEO and other senior executives now in Melbourne 4.    Preparing defence against Andrew Price
Thur 23 Feb	TTS	Chairman	Interim Results
Thur 23 Feb	TOL	Director	Interim Results
Wed 29 Feb	HST	Director	Interim Results

5 Where we stand on Boon

It’s no secret that Boon is no friend of suX, but that wasn’t always the case.

This blog exists solely because of Harry Boon. Payment of the Dec 2011 distribution would have left me as blissfully ignorant of PaperlinX as most other retail investors.

Boon also rebuffed an olive branch I extended in early December. Now I better understand the arrogance of the man and how this culture exists at the senior levels within PaperlinX. A fish rots from the head down.

However, political campaigns draw out some amazing promises. Let’s see what Harry does.

1.    If he takes the incumbent’s high moral ground and simply stands on his record, experience, etc then vote NO for Boon.

2.    Contrary to reported comments by Orbis in today’s AFR, we see no future role for Boon at PaperlinX.

3.    Boon is damaged goods. If he fails to manage this well may ruin his career as a professional director.

6 What did Mr Market say last week?

PXUPA and PPX both substantially outperformed the ASX200. Mr Market is backing a Price win at this stage.

PPX is highly volatile ranging 8.5 - 11.0¢ within the week, closing just below its weekly midpoint. PPX is a traders stock at present.

PXUPA was solid, closing on its high for the week. The sellers of PXUPA have disappeared.

Weekly Price Change			Comment
PXUPA	$21.52	+8.9%	13 W high close
PPX	9.5¢	+15.9%	15 W high close
XJO	-1.2%

7 Yes Minister, coming to you live at PaperlinX

It’s sad when leaders have to rely on tired tricks. Government enquiries are held to delay and distract; and it’s essential to know the outcomes before commencing the enquiry - same with most strategic reviews.

Much is made of the imminent release of PaperlinX’s “strategic review of our business and capital structure”. This is corporate speak for abrogation of board responsibility:

1.    Read the CVs of Boon, Cattermole, Clarke and McConnell. If these people don’t know what’s wrong with PaperlinX, they should resign.   

2.    If a man with over thirty years’ international experience in fine paper, the last eight with the PaperlinX group, doesn’t know how to solve PaperlinX’s problems; then he is the problem.

3.    The only problem with the capital structure arises from destroying $2 billion of market cap in just eight years. Any plans to solve these problems by screwing hybrid holders will fail.

Much is made of external factors like the GFC, AUD and falling demand etc; but all along the world kept buying fine paper and PaperlinX kept selling fine paper while making losses.

The two subjects of the Strategic Review are resolved with one simple solution - profits. Nearly everything else is irrelevant. The overarching problem at PaperlinX is poor management. The board is in denial.

Hopefully the Strategic Review will include a recommendation that if PaperlinX cannot pay its way it should liquidate its assets and return the funds to the owners.