asf,
RESET
Several options at reset.
1.step up and either pay or not pay distributions
2. remarket[very unlikely]
3. pay out at par, [very unlikely]
4. convert to shares [very unlikely and I would not be happy with my management if I was a PPX holder, but there is nothing they can do about it]
As long as they dont go completely broke, major downer would be a long term suspension of dividends.
BUY BACK
Another option they have which is not part of the reset and can be done at any time is to offer to buy back at a discount to face value, either on market or off.
Where did you hear about buying back 10% p.a?????
This would mean they would basically be using our annual distrubtion ( say ~ !0 p.a. ie 10% p.a. after step up from 1 July 2012) to buy back the PXU!!!
Argument from PPX would be - "well you are getting no distribution for the forseeable future anyway so you would not be getting the $10!"
This could be the reason why they pulled the distributions ie so they could play this game?
I would consider a buy-back if they paid several years of distributions on top of the 10% p.a. buy-back to partly cover our holding costs and loss of capital.
They will also need to manage the less than $50 mill face value issue you raised earlier, but expect all this would need to go to a vote anyway.
PXU
paperlinx sps trust
