When is EGM2 ? Disclaimer to Inside Knowledge

Posted Aug 1, 2012 at 13:15 hrs                                                 Twitter: @PaperlinXsuX 


PaperlinX announced at 09:40 hrs that Andrew Price has been appointed a non-executive director. Warm congratulations to Andrew.

Why effective September 1, 2012?

1. As explained in Note #4 to the Corporate Calendar, any sane incoming director would wish to have the FY 2012 accounts signed off before joining the board.
   
   Note that Mike McConnell accepted his appointment exactly one year ago today, which goes to show how smart he is!
      
2. This gives Andrew Price added authority for the remainder of his stay in the UK and Europe; and
      
3. It allows Harry Boon to get his ducks in line for an orderly exit.

Call me paranoid, that's how suX sees it.

Some people may consider last night's posting an example of inside knowledge by suX or breaches of confidentiality by Andrew Price. It wasn't and let me be very clear on this.


Inside Knowledge. The posting When is EGM2 ?  was made at 01:33 hrs this morning, Aug 1. 

It arose from an email exchange, initiated at 19:49 hrs on July 31, by a "knowledgeable and keen observer" domiciled in the UK . His email opened with "Andrew's gone very quiet!" and closed with "Any sign of another EGM?"

After a couple of friendly exchanges it occurred to suX to address the question that won't go away. I sought consent to publish the words of this knowledgeable and keen observer. Consent was offered and accepted at 22:47 hrs. suX has lots of exchanges like this. Nothing exceptional here.

The posting When is EGM2 ? was published by Feedburner at 01:33 hrs this morning. I trust this satisfies everyone. Call it luck - I find the harder I work the luckier I become.


The next CEO?  was published on July 22, 2012.


Two extracts from this post may assist readers better understand suX's level of "inside knowledge".

Timing: The board will be desperate to have the new appointee "on show" at the AGM in late October, and Harry Boon should sensibly want to exit by then.

FWIW

1. suX has no idea what Price's plan are (truly); however I can share this opinion. Andrew Price and Harry Boon are incompatible and wouldn't last five minutes on the same board.
      
2. Andrew Price has been remarkably quiet in the OZ press recently so he must be up to something.

Insider Trading suX had orders for PPX in the market at 4.10 cents and 3.70 cents, placed on July 23, and removed this morning. If I had any knowledge of an imminent announcement about Andrew Price I would have bought. I didn't. In fact, this graphic 

Posted July 25, 2012

posted July 25 on  Price of PXUPA is basing. Good news at last. indicates my state of mind about the price of PPX. The above disclosure of order levels should confirm it. Because bloggers can be accused of being "front runners" I keep records of all orders. 

It would have been nice to make 30% in nine days, but it didn't happen.

Because suX already has a substantial investment in PaperlinX via PXUPA, any purchase of PPX was purely speculative hoping to pick a panic sell bottom concurrent with yet another Cockroach Event, see here about Cockroach Theory.

Current View on PPX Share Price
Disclaimer: This is the personal opinion of the author and must not be construed as advice of any form. Also, to those who've written seeking my opinion of PPX or PXUPA as an investment, this is my response.


Everyone has plenty of time to get on board and make money here, just look at the corporate calendar.

Conclusion: 

IMO, and without inside knowledge, today's announcement probably means:

1. Mike McConnell definitely won't see the AGM in October, and for that he keeps the $101,250 suX alleges he owes PPX;
      
2. Harry Boon has probably 'done a deal' to exit with some dignity.  suX even pencilled in a date for announcing his departure in the Corporate Calendar; and
      
3. Dave Allen won't be the next MD/CEO. 

The later explains why Dave Allen has been so shirty with suX. He recently blocked emails from suX going to PPX UK employees. Don't worry Dave, Google Analytics tells suX that your employees check the blog after hours.


KeyThoughts: 

1. Anyone controlling > 5% can call EGM2, so this saga for control is far from over;
      
2. Memo Harry Boon, did you hear Mr Market today; and
     
3. Does this mean the end of PaperlinX-suX. NO!

Congratulations on your appointment.
Now the hard work begins.

                         

Board digs itself into a deep governance hole. 1/2.

Posted July 31, 2012                                                          Twitter: @PaperlinXsuX
Updated Aug 1, 2012 at 10:15 am


What started as an unambiguous breach of the Constitution by Mike McConnell, ten months ago, has now become a whole of Company governance crisis for the PaperlinX board.

The ASX Clarification released on Monday, July 30, raises as many questions as it ostensibly answers. 

Interestingly it was in response to an ASX request. Clearly others besides suX are interested in this topic.

These three "independent" directors must now act decisively, not to save Mike McConnell but to save the Company and possibly themselves. This is about the independence and integrity of the board.

Harry Boon

Chairman of two ASX companies and aspiring "Melbourne establishment" director. Under a cloud regarding the Hastie Group collapse where he was a director for seven years. It is alleged by many that the PaperlinX board is stacked with his supporters; Mike McConnell from the Ansell days and Lyndsey Cattermole who is a long standing co-director at Tatts Group.

Tony Clarke

The man who allegedly blew the whistle on Toby Marchant after recently spending 11 weeks in the UK. One construction of recent PPX releases to the ASX is that he is guilty of insider trading pursuant to board policy. 

Lyndsey
 Cattermole

Strong supporter of Harry Boon as evidenced by her comments at EGM1. Is the only director to show real alignment with ordinary shareholders by her share purchases. 




And if they don't immediately sack Mike McConnell? 

suX recommends reading about the dramatic fall from grace by Marcus Einfeld, Federal Court judge 1986-2001. He lost everything over a matter initially far more trivial than Mike McConnell's breach of the Constitution.

It started as a $77 speeding fine and ended with incarceration at 70 years of age. He served two years and was released on parole on March 19, 2011.

How did a distinguished Australian and Federal Court judge spend two years in gaol, for perjury and preventing the course of justice, over a $77 speeding fine? It's explained below.

Could defending Mike McConnell ruin three careers? You be the judge, but first hear and read about Marcus Einfeld. 

It's a salutary lesson for anyone, especially those in high office. 

Listen to these two quotes from Marcus Einfeld:



"I lied, I cannot say it any simpler than that" 
at 4 min 0 sec 


"I got myself into a deep hole and didn't know how to get out of it" at 4 min 30 sec 


Links to Australian Broadcasting Corporation's exposé on Marcus Einfeld:

1. The Program - as broadcast on ABC TV March 23, 2009;
     
2. An extended interview with Marcus Einfeld;
     
3. Further Reading - 18 commentaries on Marcus Einfeld including the full judgement made in the New South Wales Supreme Court; and
     
4. Program Transcript. 

Update Aug 1 at 10:15 am
There is no suggestion of criminality by anyone associated with PaperlinX. The case of Marcus Einfeld is quoted as an extreme example of how matters can spiral out of hand when simple rules are broken then covered up. It's also implicit that no one is above the law; at least in Australia.

Why is suX pursuing transparency and truth so vigorously? Two simple reasons:

1. If the directors don't understand right from wrong, in terms comprehensible by a lay person, then they are unfit for office; and
      
2. My first ever complaint concerning PaperlinX was about transparency in a letter to the editor of the Australian Financial Review published Nov 10, 2011. Despite the turmoil, nothing has since changed. Nothing at all.

but something must change soon or the Stakeholders will lose everything. To be continued at Board digs itself into a deep governance hole. 2 of 2.

This post will soon be continued at Board digs itself into a deep governance hole. 2 of 2.

When is EGM2 ? The Corporate Calendar.

Posted August 1, 2012                                                          Twitter: @PaperlinXsuX

Stakeholders tell suX many things and they also ask many questions. "When is EGM2" is the question most asked.

Seems PaperlinX Stakeholders are wanting to see blood at an EGM. Oh dear.

The corporate calendar is important at present.

Notes to corporate calendar:

1. It's still not too late to call EGM2 to coincide with the AGM;
     
2. There is still ample time for appointment or resignation of directors, and chairman, as shown in 2011;
     
3. It is to be hoped a meaningful first quarter performance comment is made, as a separate statement, in 2012; and
     
4. No incoming CEO/MD would want to sign off the 2012 accounts so expect his/her announcement post Aug 24, 2012.

Some thoughts ...

Andrew Price is quiet. So what! He doesn't need to say much as PPX creates enough news on its own account. 

The latest ASX Clarification, published Monday July 30, is an outwardly simple matter but demonstrates deep unresolved problems at the top. It is a storm all by itself as it cuts to the core of transparency.

Maybe Andrew Price is still doing due diligence from "outside" the tent and quietly gathering intelligence. As will be seen from the comments following, if so, he has ample time available.

Maybe he and PPX have done a deal, prediction 4 here, and he is already "inside" the tent and thus low key by agreement.

Does any of the preceding really matter because we await the 2012 FY results, due in 22 days?

Expect plenty of action between then and the last day for requisitioning EGM2 to coincide with the AGM.

According to the PPX notice of Feb 3, 2012, an EGM must be held no later than two months after the request is given to the Company. 

Sep 10, 2012, looks an interesting date. Using the above dates as an indicative timetable, there is a convenient window for service of requisition of an EGM of circa 18 days between release of FY 2012 results and say Sep 10; which would allow the Company 10 days to include the Notice of EGM with the Notice of AGM. 

This would mean a no cost or low cost EGM. I hinted at this here on July 6, 2012.

Why is the AGM later than usual? suX smells a rat.

PPX UK is the key, which is why our largest readership is there.

Apart from outstanding UK brand rationalisation that has barely been addressed over eight years of Toby Marchant's influence, it is where PaperlinX could get its biggest bang for the few remaining $A left in the kitty. Yes, let's not forget that Aussie investors have paid for this expensive party.

The largest available talent pool to save PaperlinX globally, and in the UK; is English speaking, available and successful - Andrew Price and Chris Creighton readily come to mind. There are others. 

I'm sure the board would welcome back Chris Creighton in some challenging capacity.

Finally, unedited thoughts of a knowledgeable and keen observer domiciled in the UK. Being a gentleman he avoids personalisation.

“Problem is that, in planning succession, the current senior management will be seen as part of a failed structure. Either they knew what they should have been doing and didn’t do it or were prevented from doing the right things. 

These people were probably left to get on with the job but the UK results don’t speak highly of their success. 

The sign and display market is a good area of focus but what PaperlinX UK lacks is simple day to day focus on the commercial print market. This is, of course,  in a state of some decline but represents a big investment and continuing risk if not tackled. Others are able to make money and there is no reason for PaperlinX not to.

PaperlinX needs a new, commercially focussed, CEO, but also a key UK trading leader, (and possible similar individuals in other key markets), who will lift spirits and focus energies productively and profitably. 

Strategists are not needed. Doers are.

In many ways the finding of new commercial leadership in the UK, and other markets, is more important than the CEO and vital to action quickly. Activity on the ground is needed now.”

Identify yourself and have your say.

Toby Marchant, this is your life

Posted July 27, 2012                                                       Twitter: @PaperlinXsuX


With Toby Marchant leaving PaperlinX on Tuesday, July 31, this and its companion Finis - Toby Marchant [WIP] will be the last posts that feature him.



Career Summary

30 years up the stairwell, 
12 months down the elevator shaft.

Circa 1980

1995 - 1997 President NAPM


July 2008 - Marchant takes helm at PaperlinX Europe

Marchant "thriving"
PrintWeek UK, June 2008

"... we haven’t enjoyed easy market conditions for a long time now, so we’re getting pretty good at thriving in adversity.” 

Who writes this stuff?

Date Unknown

What year was that Toby?

May 2009, Turin - 40th Annual PRIMA Conference

Toby on a roll at PRIMA.

"It´s time for merchants to 
redefine their purpose and 
relevance by 
rethinking, 
restructuring, 
re-skilling and 
re-communicating."                       Alliterations artful aid.


If it's possible to sum up a career with one simple statement - Toby Marchant was strong on rhetoric and weak on execution. 


Consider Toby's obsession about body image, which we've previously addressed here. The above photo was taken at the conference, you'll need to scroll down, yet below is his speaker's bio and photo, see here, page 4 of 6. 


Why does he bother? Who does he think he's kidding?

November 1, 2010 - Appointed MD and CEO.

CRITICAL POINT  PaperlinX’s largest shareholder Orbis Investment Management which then controlled 12.96 per cent of the company said:

“... Mr Marchant is very good and we are happy that he has been appointed.”

April 2011, Milton Keynes is the new Global Centre of PaperlinX

So this is what being CEO is all about.

Glad to see that this new shiny very expensive Mausoleum was a high priority in Toby's first six months of office.

Feel the security of something solid,
like an anvil or PXUPA Hybrids

Sep 2011, Melbourne

No, that isn't Scoresby in the background.

February 3, 2012 

Orbis publicly supprted Andrew Price's attempt to topple Harry Boon so that Toby Marchant could be sacked.

That was the end of Toby at PaperlinX. 

March 24, 2012      

Immediately post EGM1, on Saturday March 24, 2012, suX predicted much weaker share prices in Protagonists Talk, Money Shouts.

THIS CHART of PPX share prices over the 12 months to March 23 confirmed a short term view of 6.5 - 7.5 cents.

It makes 4.0 cents look very sick.

The published conclusion then was: "... PaperlinX continues to preach to an empty cathedral, synagogue, mosque or whatever is your place of worship. Very soon all that will remain is prayer."  

That didn't take long.

The body language says it all.
April 2012, Print Business UK

April 2, 2012

Toby thought suX was wrong about the share price of PPX. He thought suX was wrong about most things.

He buys on market for the first time ever. 900,000 at 8.36cents, ouch! See Appendix 3Y here. 

Lucky that Toby has 30 years experience and owns no shares

June 2012

Director and Stakeholder
both bailing out of PaperlinX.
Now do you understand the difference?

July 17, 2012 - Toby sacked. PPX hits 4 cents. Oop!

Mission accomplished.

PaperlinX chief executive Toby Marchant signalled that the disaster-prone paper merchant had ''reached a major turning point'' as its shares slumped to a new low of 4¢. Thanks Toby. Full story and original cartoon is here.

Such is life.

I want you to do to me what you did to PaperlinX,
just more slowly.

___________________________________________

One final joke.

DID YOU HERE ABOUT THE DUCK ...

who asked for a packet of condoms at his local pharmacy?

"Certainly, sir" said the lady behind the counter, "Shall I put them on your bill?" "No way!" replied the Duck, "I want to look good for this occassion!"

We bid adieu to Toby Marchant.

Which is the odd one out & why?

Posted July 29, 2012                                                     Twitter: @PaperlinXsuX


Readers are invited to guess under the comments section.

Courtesy The Age 

What the workers are saying in the UK

Posted July 27, 2012                                            Twitter: @PaperlinXsuX

This blog isn't a one man band although one man produces it.

suX reviews and co-ordinates material voluntarily sent from a diverse range of sources within the greater family of PaperlinX Stakeholders, and publicly available independent or statutory reports.

After reading every page of every annual report and price sensitive release to the ASX since 2000, only one picture emerges - prolonged and gross mismanagement at most levels in most countries; particularly in OZ, the UK and Europe.

Below are two comments from concerned people in the UK.  Neither of them desire to be the next CEO or chairman, but both urge significant cultural change at the top.  

I've heard this message dozens of times from people inside PaperlinX, former employees and those who've never worked at PaperlinX but know the UK fine paper market. 

These two comments explain why PaperlinX has lost $2 Bn of market capitalisation in just over eight years.

You may read the originals here. They are comments #5 and #6.

suX seeks statistics on UK paper merchanting

Posted July 27, 2012                                         Twitter: @PaperlinXsuX


Why do paper merchants accept so many bad debts to occur? 

There will be reasons and I've read about the industry's approach to phoenix companies, but ...

What prompted this question was some peer-to-peer company research suX was undertaking. I fell upon Mike Gee's address to NAPM on May 18, 2010 where he quoted summary bad debt figures:

"2007 was £9.3m
2008 was £14.5m
2009 reported to date is £17.5m

If we look cumulatively at the figures since 2003, for the last seven years, we see a total problem of some £89m - not a small figure, in any book. This has led the few remaining credit insurers to toughen their stance and, in many cases, significantly increase their premium rate, or refuse cover."


He continued, “If we look at our pricing index historically on a like for like base, with October 2003 being the benchmark at 100, 2010 was only 102.4, a rise of 2.4% over 7 years. Whereas the retail price index has risen from 178.4 to 217.9, a gain of 22.14%.


suX must challenge the later because paper is a commodity. Wholesalers should make profits at every point in the price cycle. Anyway, that's for another time.

Request for statistics on the UK paper merchanting business
Could someone help, please? I'm seeking yearly figures back to 2003 on:

• Sales by tonnes and GBP
• Bad debts
• The "pricing index" referred to by Mike Gee
• Estimates of market share, be they be by company or top10 companies or something similar

Why would suX be interested in these figures? Watch this space.

Dissecting the business of paper merchanting

Time again, industry professionals tell suX this is an uncomplicated business increasingly made complicated by those less profitable. 

It seems that profits are inversely correlated to "perceived complexity". Have you seen the Organisation Chart for PPX UK! OMG!

Whereas on twitter, @ukpaperman or https://twitter.com/ukpaperman describes himself as:

"Seller of paper products to printers..how hard can it be?" 

Because suX is a simple fellow, the business seems to be no more complicated than retailing packaged groceries; as these days merchants add little value to the product en route. 

Ex mill sales are the ultimate uncomplicated commodity sale and have you seen a supermarket incur a bad debt recently?

suX is trying to ascertain what a functional PaperlinX may look like. Seems there are only five key elements to paper merchanting:

1. Buying
2. Selling
3. Overheads
4. Distribution
5. Bad debts

Overheads are a problem for PaperlinX. Memo Toby Marchant; overheads and margin are unrelated. Distribution appears to be an industry challenge and bad debts too.

For reasons which suX now understands, fine paper insists on over servicing printers with "essential service" delivery standards for which there appears inadequate compensation.

Two comments during the course of wide-ranging investigations:


"You can get a paper delivery in Sydney quicker than an ambulance" and


"You can get stationery delivered in London quicker than blood plasma"


The commentators will recognise their quotes. 

OK, there may be a  touch of hyperbole but everyone knows what I mean. Seems odd to suX as distribution is expensive as evidenced by the published accounts of DeliveryCo. The Company tells employees it is a "not for profit" yet it loses a motza.


If bad debts are £89+ m for seven years, this figure is probably a decent proportion of the Profit before Tax of the entire UK paper merchanting business over that time. It doesn't matter whether the losses were incurred by merchants directly, or by their insurers, it's ultimately a cost to everyone. 

This was starkly brought home by two recent observations:

In his Handing over the baton letter, Toby Marchant advised in point 4.3, page 2: 


"we are now in a position to ... regain credit insurance ..." 


While he is silent on which side of the ledger, debtors or creditors, this applies to, it indicates the problems associated with bad debts. suX wonders why this aspect wasn't announced to the market also? Is it a secret?


On June 25-26, 2012, suX announced here, right at the bottom:

________________________________________________

Fact from Canada Coast Paper looks like taking a hit for

CDN 1,377,724.65 with Web Offset Publications Limited. 

Hope it is insured. See creditors list of CDN 18 million.

I'm reliably advised no such luck. Apparently the credit insurer, Eulers, cancelled cover some months ago, because of ... 

Something about financial stability of PaperlinX. Timing is everything.

________________________________________________


Please help if you have any UK paper statistics. 

Thanks.