PPX says "Bye, bye American Pie" + serious stuff

Posted June 26, 2012                                                         Twitter: @PaperlinXsuX

Strategic Review released. Possible headlines:

Moving deckchairs on the Costa Concordia.

Andrew, all is forgiven. Please come back.

Mike McConnell loses $21, but still nothing else?

Harry Boon takes control!

Strategic Review, sans Marchant!
  
Is that all there is?
 
Strategic Review a fizzer.

PXUPA fired up - that's not in the script!

PPX hits all time equal low after Boon's win and Strategic Review.

Every PPX investor in history now losing money.

Bad news for non-performers - PPX can afford to sack you.

Chris Creighton unjustly penalised by loss of USA.

Bye, bye American Pie - the winner.

Hear Don McLean here with on screen lyrics for a sing-a-long... makes me all nostalgic

Bye, bye Miss American Pie
Drove my Chevy to the levee but the levee was dry
Them good ole boys were drinking whiskey in Rye
Singin' this'll be the day that I die
This'll be the day that I die   Complete American Pie lyrics here.

Toby Marchant fails on execution and delivery.

Marchant, helped by UBS, is now working hard on his much-vaunted strategic review, due to be delivered before the group's 2012 annual results.

Everything is on the table, even potentially a move to a London listing.

"Given where we have been, everything becomes possible. I can't rule that out. I can't rule anything out," he says.

The Australian "Paperlinx chief Toby Marchant takes on the challenge of turning around the company" - Sep 7, 2011 

Toby Marchant, Melbourne
September 7, 2011

If the document released to the ASX on Tuesday, June 26, is intended to be that referred to above, nine months ago, then Marchant has failed. If there is more, where is it?

Boon, then Price Boom and now Boon again. Where to now?

One week later nothing changes except PPX today closed at an all time equal low of 6.50¢ - yuk.

HELP - time for the 'opportunistic buyers' to reappear.

Remember me, from exactly 3 months ago?

Remember when suX predicted 6.50 cents? 
It was published in Protagonists Talk, Money Shouts on the weekend immediately following EGM1. 

We've arrived at 6.50 cents, but will this train wreck stop there? Probably not, but it's hard to see any significant loss or gain from here.

SuX expects no significant share price action until either:

1. EOY accounts; or
      
2. EGM2; or
      
3. A new 3rd party arrives.

Otherwise, it's hard to see any immediate good news for PPX. 

12 cents now looks a forlorn hope. Nothing the current management of PaperlinX says or does will cause PPX to break through this resistance as the words of PaperlinX have proven to be unreliable guides in the past; way back to April 2000, see here for proofs.

As Ross Perot famously said:

Talk is cheap,

Words are plentiful, but

Deeds are precious.

Whether or not a strategy is correct, PaperlinX has consistently failed to execute its strategies. Thus the Strategic Review is a worthless announcement without concurrent and brutal changes of culture from the very top.

Others will blame share price weakness on EOY tax loss selling, where 46,000 shareholders now automatically qualify; Greece or whatever. 

The sad fact is that everything is written in the share price. The board has failed and contrary to Harry Boon's rash assertion post his EGM1 victory, it does reflect upon him as captain of the team. 

Obviously Mr Market prefers Andrew Price to Harry Boon.

Glimmer of hope for PXUPA

• If the board comes to its senses; and
       
• If voluntary redundancies are immediately offered; and
      
• If the spendthrifts are immediately sacked; and
     
• If PPX can sell off bite-sized chunks, like USA and Italy, and avoid contingent liabilities; and
      
• If the banks don't play hard ball all the way; and
     
• If a top notch external operator is appointed to solve the UK problems - no European or UK internal candidate could possibly do the job and need not apply; and
     
• If all businesses worldwide are run in a profit/work out mode rather than growth mode with no more non-essential expenditure like steaming cleaning factory walls;
   
  then, but only then
   
  PXUPA holders may do quiet well. 

Don't forget, PPX cannot do anything significant to its capital structure without PXUPA holders being first in line. The auto step-up to BBSW + 4.65% makes this position even stronger.

HOWEVER - no heroics please. If the reason behind the sale of PaperlinX USA is that Boon has chosen the 'hero option' then everyone is doomed.

It's been suggested to suX that Harry Boon now fancies himself as a turnaround guy; and after the Hastie experience he wants to show that he's still got it and end his career on a high. That may account for his recent 'executive chairman' style in recent times.

This is high risk high reward strategy, only capable of execution by folk with serious skin in the game. That's why Private Equity exists or 10% equity punters like Andrew Price and his supporters. 

Harry Boon, please print this in full colour and frame it over your desk as a reminder of what the egos of Messrs Meiklejohn and Wightwick did to PaperlinX. 

You're otherwise occupied and lack a track record of turnarounds to even contemplate this hero's role. Spend more time with your grandchildren and make the world a better place.

Analysing the Strategic Review.

FACTS, ALLUSIONS, SPIN and MISREPRESENTATION.

Facts, apart from hard numbers and actions of third parties

1. This is the end of the Strategic Review. Good     
2. Toby Marchant doesn't appear anywhere. Good, he must be going.
       
3. No longer in discussions with third parties in relation to a whole of company proposal. Good.
       
4. Reduction of headcount, top of page 4, from 5,435 to 4,500 by end of FY14. 

Headcount is a damning indictment of Toby Marchant as a manager since 2003. This reduction is probably too modest and certainly confirms Toby Marchant's imminent departure.

The obvious inefficiency of PaperlinX was highlighted here in PaperlinX needs to shed about 1,200 employees. This was before the sale of Italian and US operations. It doesn't need a Rhodes Scholar to work it out. 

Readers will also note that in 4 Years of Hubris, for each acquisition in 2001-2003, a sales per employee figure is highlighted in red. For example, When Coast Paper was acquired in 2001, it had sales per employee of $921K pa. 

In 2011, the PPX equivalent figure was $753K, after 11 years!

It logically follows that PPX bought Coast because it was profitable, because it was efficient. PPX today is financially stuffed because it's inefficient.

SuX is pleased to know the board now understands this simple concept. How does suX know? Well, it's in Melbourne's "little paper" with the headline 1000 Paperlinx jobs to go as demand dwindles

Allusions

Diversified products are portrayed as the Company's salvation with higher margins of 23%, page 2. My recent enquiries reveal that PaperlinX and its predecessors have been engaged in Packaging and Sign & Display for many years with varying degrees of success. 

Names like William Cox, Paragon and First Class Packaging come to mind. Remember British Airways as a client about a decade ago?

The improved margins are presented as a salvation whereas the Company wide problem is too many overheads.

Apparently everyone understands that except the board and senior executives.

Spin

1. Quote by Harry Boon, top of page 2, save for the last sentence.
        
2. Declines in paper volumes are again given as excuses, page 2. Europe has had problems since 2007-08 and this isn't new or different. That's why the Company has highly paid leaders and managers who purport to know their markets and clients. Toby, it's part of the job spec.
      
   Kodak had the same problems.
       
3. SPS Update, bottom of page 4.
            
   Use of the term "central issue" is a joke for reasons not yet permitted to be made public. Hybrid issues will not go away and its about time PPX understood this beyond platitudes.     
        
   Referemce to a hybrid buy-back is a waste of words as (1) it won't happen and (2) there is an ASX procedure that precedes it. Insincere wasteful words.

Misrepresentation

For further information, please contact James Orr. 

Good luck with getting anything from him, and apparently his successor. 

As advised in Mike McConnell - outstanding questions remain a simple written request remains unanswered since June 5. 

The simple question is below. Apparently someone has told The Age, but not a stakeholder.

Here is a true copy of an email sent to Wayne Johnston on June 26 at 13:41 hours. He is Deputy CFO and EGM Corporate Services Elect from July 1; and successor to James Orr.

I wonder how long a response to this will take?

Dear Wayne

I refer to my unacknowledged email of June 21.

Now that three weeks has elapsed since the initial request to Ms Wong, I consider your responses to Requests #1 and #2 are well overdue. 

Following the announcement about the SPS Trust in today's Strategic Review, I expect to add supplementary requests to Request #3 in the near future.

Kindly advise by return your intentions regarding to these matters. 

If you intend to continue to ignore me, just say so to avoid future misunderstandings.

Kind Regards

Graham Critchley

No

Why are simple things so complicated?