overview

OVERVIEW
********

You don't usually look at a Stock to Watch on a trading halt but
what better time when the stock is suspended in the present market
climate.
The only argument at the moment is that there is no market to buy
and sell.
Paperlinx Ltd (ASX:PPX) is at its lowest price since July and
offers a good income yield of 6.5 per cent.
The good news is that a solid industrial is able to raise $300
million in a book build in today's uncertainty.
Paperlinx is seeking to raise new equity through an accelerated
non-renounceable entitlement offer.
The institutional component of the entitlement offer seeks to
raise about $200 million, with the potential for an additional $100
million to be raised through the retail component of the offer.
Net proceeds will be used to repay debt, including the committed
$150m reduction in Paperlinx's multi-currency facility by May 2009.
This will strengthen the company's financial platform and support
the continuation of its strategy of building on the key competitive
advantages in its two business streams of global paper merchanting and
paper manufacturing in Australia.
CEO Tom Park said, "This raising will enable Paperlinx to meet
our obligations to reduce our multi-currency facility ahead of time,
increases flexibility to fully explore all options in relation to
Australian paper and removes uncertainty from the market on the potential
pro-rata entitlement offer.
"We are conducting this raising at a time when we are seeing
positive moves for Paperlinx in exchange rates and favourable industry
consolidation announcements, including significant consolidation and
capacity closures announced in Europe on Monday.
"This should help support paper prices in most key markets.
"While we are seeing negative volume impacts from the global
economic situation, we are looking to mitigate these with our profit
protection plan and European asset sales," Mr Park declared.
Paperlinx is one of the world's largest fine paper merchants.
It distributes nearly four million tonnes of high-quality fine
paper, sign and display and graphics products, and industrial packaging
to printers, stationers, office suppliers and other customers in five
continents.
It is Australia's only manufacturer of printing, writing and
office papers.
The company manufacturing and distributes around 500,000 tonnes
of high-quality communications papers at four Australian mills, primarily
for Australian customers, but also for export.
Paperlinx is a leading manufacturer of packaging papers,
producing around 300,000 tonnes of linerboard and sack bag papers for
customers in Australia and throughout the Asian region.
Last month Paperlinx reported a net profit of $72.2 million for
the year June 30, compared with $80.1 million for 2007.
Earnings before interest and tax (EBIT) was $160.4 million, down
14 per cent.
The 2008 result reflected the impacts of very challenging
external market conditions, including rising costs, weak global demand
and a weak US dollar.
Against this, the group made good progress on cost reduction
programs, growth in higher-value product segments and continued to
deliver its program of strategic initiatives.
Chairman John Meiklejohn declared it was year where the external
environment again proved to be extremely difficult and increasingly
challenging.
The profit results for the group were down but the benefits of
the strategic initiatives undertaken in recent years ameliorated to some
extent the negative impacts of the adverse market conditions.
"We have been operating in difficult economic conditions now for
some years and this has had a negative impact on our profits, our share
price and on returns," the chairman said.
"Although we do not see any short-term changes in market
conditions we will continue to focus on the key strategic areas which are
under our control which involve reducing costs, improving productivity
and improving production efficiencies."

SHARE PRICE MOVEMENTS
*********************

Shares of Paperlinx are suspended at $1.75. Rolling high for the
year is $3.16 and low $1.515. Dividend is 6.5c to yield 6.5 per cent. EPS
is 10.1c and p/e ratio 17.33. The company has 453.1 million shares on
issue with a market cap of $793 million.
The chairman says a major focus of the management and the Board
over the past year has been on the completion of the new bleach plant and
pulp upgrade at its Maryvale Mill.
This project has not proceeded in line within the company's
original cost and timing expectations and is now scheduled for completion
later in the 2008 calendar year.
However, the strategic rationale for the upgrade involving
increased capacity, reduced production costs, improved environmental
performances and improved product quality remains unchanged.

BACKGROUND
**********

Paperlinx Ltd joined the Australian Stock Exchange on April 17,
2000, as a result of a de-merger of Amcor's paper and manufacturing
distribution business.
The company is now the world's leading fine paper merchant and
Australia's principal manufacturer of quality communication and packaging
paper.
Paperlinx sells over 4.5 million tonnes of paper and packaging
materials worldwide.
Its main focus is on manufacturing and distributing high-quality
fine paper used as office paper, and specialty paper used in brochures,
magazines, annual reports and other business papers, and in manufacturing
high-quality packaging papers for converting into corrugated cartons,
paper bags and other packaging materials.
The company is in a unique position as the only worldwide fine
paper merchant enabling it to link its customers and suppliers through a
global network of locally focused fine paper merchants that are
underpinned by the resources of a multinational company.
Paper, board and other materials are bought in bulk from paper
mills around the world and sold in smaller quantities and custom sizes to
meet customers' requirements.
In Australia the company operates four paper mills and is the
largest supplier to the Australian market of office paper used for
printing, copying and plain paper faxes.
It also manufactures a range of specialty papers including
security grades and high quality papers used in direct mail outs and
publications.
Many of the packaging grades used by Australian packaging
manufacturers for food products are also made by the company's
manufacturing division.
In fine paper merchanting Paperlinx has a wide spectrum of
customers but typically service printers, designers, publishers and
advertisers.
With global headquarters in Melbourne, Paperlinx operates
regional management teams in Melbourne, Amsterdam, Los Angeles and
Singapore.
Paperlinx employs over 9,600 people in 28 countries and is in the
top 200 public companies listed on the Australian Securities Exchange.

Reuters.