proposal, page-38

Firsova

>I think we will see a solid asset sale change the momentum on PPX , and leave the PXUPA exposed .

A possible outcome. A sale of the US assets for example might get the non-hybrid obligations out of the way in which case PPX can survive and ultimately prosper provided they can stay cash flow positive.

Graham

>Clarification:ABC 7:30 Report approached me. I didn't approach them.

No need to be defensive here. You have done investors a service as the ABC program did a good job of pointing out some of the risks with hybrids.

>Until you and many other folk here understand (or accept) ALL the differences between debt & equity, up to the end game, and stop relying solely on PPX's right to stop distributions then I understand your views.

>No one forced PPX to borrow via PXUPA and PPX's problems are of its own making and long standing.

>The idea of debt is to increase returns on equity for profitable businesses. It does the opposite for unprofitable businesses. In fact PXUPA has to date "saved" PPX and if you doubt this then read

>http://www.paperlinx-sux.com/2011/12/how-pxupa-saved-ppx.html

and explain with facts why this view is incorrect.

>The priorities are:

#1 Banks
#2 Hybrids
#3 Equity

>If the hybrid equity was absent, I expect the banks would have pulled the pin in 2009/10 - please read all the ASX Releases before disputing this.

I do not dispute any of this. However because PPX was able to get PXUPA away and if they can make sufficient asset sales to pay off the bank debt, I believe they have no obligation to pay divs or cap returns to PXUPA holders until PPX gets back to a healthy position.