a share swap?, page-19

Blues, I think in reality getting a new note is highly unlikely. They want to clean up the balance sheet and ownership structure. Most likely for an offer of take over by private equity imo. It will most likely be pure "PPX" script based.

Certainly their wouldn't be much reward (for the effort) if PPX issued $40 of script and $40 of new notes. They are only locking in $20 of savings on the balance sheet. They would still have "notes" to deal with. And would the notes be worth face value considering history?

But I guess it would leave only about $112mil ($40 x 2.85mil notes) of notes instead of $285mil. It would also "save" $56mil (ie $20 x 2.85mil notes). But obviously it would increase equity by about $170mil which is a good outcome.

I still prefer to work on the 50:50 scenario, which as you say is about 210 shares. If the shares can re-rate due to $285mil improvement in balance sheet, then that offer is worth substantially more than current market price. How much more is anyones guess. But logically worth >$40.

I suspect with PIGS being anti management, and possibly wanting to wing up the company. That is why PPX are working with the 40% figure. To keep control of the company.

but their are entities with 13% of PXUPA which if diluted to 40% of PPX would be 5.2% holding in PPX. Enough to call an EGM. And if a few larger holders joined together they could get the 20% holding for a board position. Not enough to control or effect change. But enough to atleast have a say in future decisions.

I see it panning out similar to BEPPA. Some friendlies will buy PXUPA on market. Maybe already have?

The opposition "PIGS" (Lowy in BEPPA case) will argue for better outcome. The offer gets revised up. You walk away with something fair and reasonable but below face value.

If this "rumour" from the AFR and from the PPX update gains momentum then we will see a large re-rate in PXUPA, and if the deal looks like getting passed by holders then PXUPA will even rise fully to the offer price. Remember BEPPA rise to 40c?

But for now market doesnt believe it imo or we'd see action because it is the first real chance of cashing out of a perpetual instrument PXUPA holders have had. And it could be the last chance too.

The interesting part for PPX is will the sp rise and how much under the above scenario. With BBI/BEPPA the BBI price was capped at 4c due to the take over. And wasn't even worth that due to asset write downs.

Certainly PPX has been strong since the results. So either market was slightly impressed with the numbers or excited at prospects of removing PXUPA from the structure.