grahamcc please leave us alone, page-15

firsova

That's what happens at cyclical bottoms. Study history, and please don't tell me this time is different.

Anyway, here is the real news below posted at 2:55 am by the crusty old guy.

Suggest you keep an eye out for Pxupa Investor Group Support (PIGS)

QUZ - http://www.paperlinx-sux.com/2011/12/quiz-guess-nta-of-ppx-at-31dec2011.html

Guess the NTA of PPX at 31Dec2011. First nearest entry wins an attractive prize.

I'm sure the PPX bulls here will clean up on this one.

Life at PXUPA is just starting to get interesting.

AFR Tuesday 3 Jan 2012
CARRIE LAFRENZ
PaperlinX chief Toby Marchant says the paper manufacturer is in talks with a number of parties, including the buyout firm that has made a conditional offer for the company.

PaperlinX flagged an incomplete and conditional proposal from an unnamed private equity firm for its business just two days before Christmas. “We are pursuing options, of which one is a an approach from this financial sponsor,” UK-based Mr?Marchant told The Australian Financial Review???yesterday.

“We had a small hiatus over Christmas but we are in the process of due diligence and are weighing up other offers to the company. It’s a serious approach [by the private equity firm] and we hope to have due diligence finished by end of the first quarter.”

The company has flagged that its compliance with loan covenants in the year to December 31, 2011 would depend on the size of write-downs for its struggling European business. It forecast a first-half loss of $26 million as trading and general economic conditions have deteriorated.

Mr Marchant, who took over as chief executive in November, said the group was mulling offers for parts of the company. He admitted that with Europe under pressure, selling parts of PaperlinX to save the rest might not be a bad option, “although it all comes down to value”, he said. “Either way, this would give us the funding required to re-calibrate the business.”

Industry speculation about the identity of the private equity suitor has ranged from Nordic leveraged buyout firm Altor Equity Partners to US ­private equity fund Atlas Holdings because of their experience in the sector. Altor bought Swedish paper and packaging business Papyrus from Stora Enso for €680 million in 2008. Atlas recently combined its packaging operations with International Paper to form one of the world’s largest specialty packaging companies.

While paper demand is correlated to economic growth – and the outlook for Europe is poor – the private equity play for PaperlinX is about restructuring and penetrating high margin segments.

The troubled paper merchant’s major shareholder Orbis Capital is hoping a formalised bid may spark changes at the company, which has been a material underperformer in recent years.

“I would like to see someone a bit more entrepreneurial to buy into the company, someone with skin in the game,” said Simon Marais, managing director of Orbis. “Those guys who have been running the business previously have not had any capital tied up in the business.”

The private equity offer, which has been made to both common stock and hybrid holders, is believed to value the company at about $480 million including debt. This is based on the $120 million capital value of the 9¢ a share offer to equity investors and $21.85 per security to hybrid holders. PaperlinX’s debts include $172 million of outstanding debt, $100 million of debt that fluctuations and $88 million in unfunded pension liabilities. Common equity holders would receive about $55 million if the bid eventuates. Hybrid holders would be paid about $62 million.

One industry source said a break-up of the company made sense since PaperlinX was struggling despite cost reductions. The company’s poor performance over the past four years has resulted in a steep fall in its share price to just 8.4¢ from $4 a share in 2007. Its market capitalisation now sits at just $51 million, compared with $2.2 billion less than a decade ago. On December 23, the company said it was within all of its banking covenants. However, it said compliance at December 31 would depend on the size of an impairment charge for goodwill on the European operations and future trading performance. PaperlinX posted a $108 million net loss for the year to June 30 – its third annual net loss in a row.