IonaYour analysis assumes a conversion of PXUPA on the basis of...

Iona

Your analysis assumes a conversion of PXUPA on the basis of the PXUPA conversion conditions in their issue conditions other than for Change of Control.

On the other hand if PPX were to sell some of their assets (eg the US or Australian operations) and have residual cash after paying out the banks they probably could buty back PXUPA on market without triggering a relevant event.

From http://takingstock.com.au/2011/09/paperlinx-another-sorry-tale-of-woe/

"Danny Sandler November 16, 2011 at 8:49 am

Hi Aaryn. That is a fair question. The PXUPA prospectus states that in the case of non-payment of distributions, among other things, “PaperlinX must not: redeem, reduce, cancel, buy-back or acquire for any consideration any share capital of PaperlinX…”

The key question then, is what constitutes ‘share capital’? Orbis is obviously of the view that the PXUPA instruments do not constitute share capital of PaperlinX. I tend to agree with them on this point.

Reply
. Aaryn November 18, 2011 at 1:32 am

Thanks Danny. I’ve spoken to a couple of fund managers and PPX, it seems everyone has a different interpretation of the document, though for the sake of conservatism I’ll go with Orbis’ view. Ultimately we’re waiting on the results from the Strategic Review over the next 6 months, though I have a sneaky feeling that PXUPA will work out ok from ~$20. I’ve never held any PXUPA (or PPX), though I think that these situations can prove highly worthwhile from an educational point of view, and perhaps as a trade idea as the price falls.. I do note that the market depth for PXUPA has improved dramatically today – an interesting case study."