PPX is clearly a poorly run company from the top down. But the...

PPX is clearly a poorly run company from the top down. But the selldown of PXUPA has all the hallmarks of an hysterical rush to the door. The key to it all is payment of the distribution next month. Yes or no?

Presumably PPX is indifferent to paying the distribution and would rather keep the cash. But it has paid out two distributions which removes the dividend lock on the ordinaries. To now suspend PXUPA distributions sends the message to the ordinaries that there is no resumption of dividends until the second half of 2012 at the earliest. In effect the prior two distributions are then just wasted if they were made to assuage the ordinary shareholders.

The announcement was unclear as to whether new guidance provided for the PXUPA distributions or not. But the present Board and newly installed management won't be around to pay any ordinary dividend if it becomes clear they have no ability to turn the company around as signalled by any suspension of PXUPA distributions.

You would have to think that they realise their ongoing roles with the company depends upon ordinary shareholders remaining calm. $11m in preference distributions is not a huge amount given the company's debt position particularly when compared to the likely shareholder/institutional revolt that a flagged further suspension of dividends will bring particularly when the dividend lock has just been removed.

But who knows? Clarification from the company would stop the rot or exacerbate it. But at least the market would know.

Lizard.