new lows, page-13

Rather than an official buyback which has limitations as per the trust deeds, I'd favour a change to the constitution. Their is value to PXU and PPX if a haircut is agreed upon. But it would require a vote. So their would need to be give and take, or worse, the realisation that things are doomed and you basically have no choice but to agree.

Obviously the buyback makes the company stronger. It removes $200mil odd of debt and costs on $20mil odd to do it. A gain of $180mil. PPX benefit.

Partial buyback also benefits remaining PXU holders because their NTA rises and they have more breathing space under voluntary administration.

But banks wont want even 1c spent paying back unsecured debt ahead of them.

So what I would propose is a 60% haircut. Offer PXU 40c in the dollar. This is how it would work and what holders would get in exchange.

Notes on issue would be consolidated by a factor of 2.5x, so if you had 2500 PXU, you now have 1000PXU. Face value of the new PXU remains $100.

So PPX have reduced $250 FV debt into $100FV debt (ie 40c in the dollar).

PXU are currently around $10. If it was a simple consolidation the new PXU would be $25 and the FV would have risen to $250. And you'd be no worse off. However FV has dropped to $100, so you are worse off.

So why would you agree?

Because in ecxhange, I would re-write the constitution. I would terminate the perpetyal nature of the hybrid and give them a 3year term. You WILL get your $100FV in 3years in either cash or shares regardless of the market value. That will see them trading much higher than the inferred $25.

I would also re-instate the distributions, and at a minimum make future distributions accumulative. So if they skip payment, they will eventually owe you that payment. It will all add up and worst case is they never pay a cent and in 3years you are owed $30 interest plus $100 FV. If they still don't have cash then you get $130 of shares.

On conversion of shares you would have significant amount of shares on issue but also significantly less debt. You might not get $130 by selling but you will recover a decent amount imo.

But in the mean time you still need to turn the company around. You still need to service and infact reduce secured debt.

Pointless gaining $100mil from restructuring PXU, if you just lose that $100mil elsewhere.