a share swap?, page-15

Partial conversion is still an improvement. Just hard to see it gaining momentum.

PIGS are probably applying pressure because they see the PXUPA equity slipping away with each quarter.

PPX are saying they cant unlock any value in PXUPA and it's easy to see why. Their are really only two outcomes. PPX continue to lose money and everyone eventually gets nothing, although under this scenario they may breach some covenents first. That might force full conversion as a last ditch effort to stave off creditors. PXUPA would then own PPX and cause board spill. Then either attempt turn around or sell off everything and wind up the company. But it would be too late by this stage.

The other outcome is a slow turnaround. Every cent goes towards debt reduction. Nothing left for interest or redemption. Equity would improve and PXUPA would slowly rise. The next interest step up is Dec 2013 but you wont get it anyway.

The third option doesn't exist. That is a fast recovery.

So if you are offered slow death, slow recovery, or a quick buck. The quick buck may win out. Should they accept less than $100? Probably not. Would they? Probably if they are shown the reality of how long to recover $100. But it is a transfer of wealth from PXUPA to PPX which isn't fair according to how the shares rank.

Now my calculation which used the balance sheet numbers of about $280mil equity attributed to PXUPA and $80mil attributed to PPX is only according to PPX. In reality I doubt it is all there. Certainly not in a fire sale scenario. So $58 is optimistic imo. But I suspect the offer could be around $40. It certainly isnt 120sh @6c = $7.20 nobody would accept those terms. So clearly they expect a major re-rate that would boost the sp and boost the PXUPA value if you accept.

You can only unlock value by selling at or above book value or a full/partial takeover. Asset sales are difficult and take over virtually impossible with the $285mil liability.

I doubt their will be a cash component. They have none. But the script + "something" might be plausible. In the BBI/Beppa scenario, holders maintained a right to "extra" in the event of a sale. Mainly because the hybrid was secured against that asset. No such luck for PXUPA, but they could still be offered a new note (listed or not) that gives then some additional future payment. Maybe that is the "cash" component. A deffered payment.

Something like 100shares now and a $20note deffered until 2016.

The value is their but unlocking it will take compromise imo.