bargain, or not, page-13

Hey Blues

The formula is actually a little less favourable than that.

Have a look at page 14 of the PDS - link at http://www.paperlinx.com.au/Resources/Investor_Information/PaperlinX_SPS_Trust/PaperlinX_PDS_Step_Up_Preference_Securities-Feb-2007.pdf.

The numerator is the Redemption Amount ($285M give or take), and the denominator is not just the 20 day VWAP which is what you have used below. The denominator is the lower of 97.5% of the PPX offer price; or the SUM of the 20 day VWAP and half of the amount by which the PPX offer price exceeds the 20 day VWAP.

So plugging in a 42c PPX takeover price (and let's use a 9c VWAP):

$285M/{9c + 16.5c} = 1,117B new shares.

Value of takeover offer at 42c for PPX is $255.78M.

Total PPX shares post-dilution is 1,726B (609M + 1,117B).

Consideration per post-dilution price is 14.8c per PPX.

PXUPA new PPX shares of 1,117B at 14.8c per PPX gives $165M to PXUPA (about $58 each) and 14.8c per PPX.

So the higher the PPX price can get before a takeover, the worse it is for PXUPA under the formula BUT equally, if the predators pump the PPX price for this reason they make it harder to takeover the ords as the asking price goes up.

Diabolical.

Still, shouldn't be too hard - hey the equivalent amount of the PMP offer from yesterday would take out the entirety of PPX/PXUPA at 15c/$58!