The bid by the company, at this point in time and in the manner...

The bid by the company, at this point in time and in the manner it has been presented, is not only premature but also futile and unsophisticated!

The bid is premature because the turnaround of the company at this point in time appears to be neither sufficiently advanced, nor assured, to make PPX scrip look desirable to the PXUPA shareholders as a trade-off. The Chairman's words accompanying the bidder's statement attest to this.

Therefore, until and unless there is evidence of assured turnaround in the performance of the company, this bid, regardless of the conversion ratio, is futile as it would not produce an outcome acceptable to all stakeholders. Rather, it would prove to simply be a temporary feel-good exercise on behalf of company's directors and PPX shareholders.

The notion that the banks would be more amenable to provide ongoing support for the company after a PXUPA-to-PPX swap is a furfie, as the bank debt would always have a higher security ranking than PXUPA. So the banks' ongoing support would not be dependent on whether PXUPA and PPX have become one, rather it would depend upon the ongoing viability of the business and its ability to service and repay debt.

The bid is also unsophisticated! To engage an expert to come up with the idea of scrip swap (and that too as a low-ball offer) because the company has no cash to buy PXUPA with ... well how sophisticated can that be? There could have been an offer of a mix of cash and scrip, with cash to be paid on a deferred basis after the company's performance metrics improve to pre-defined levels (ie. as interest-free loan). Or perhaps a third party could have been introduced to take up shares in the company subject to PXUPA partially or fully accepting the scrip swap at a negotiated conversion rate (resulting in concurrent capital injection and clean-up of the capital structure). I am sure the 'genuine' experts could come up with more alternative approaches to the ones I have indicated above.

In the final analysis though, the company's performance must improve if either PPX or PXUPA holders are to receive any return on capital, or avoid a capital loss. And for that to happen, the directors of the company have to show more confidence in the future of the company than the Chairman's words accompanying the bidders statement have indicated.

(I hold both PPX and PXUPA)