Consider the following extract from the Chairman's address: "In...

Consider the following extract from the Chairman's address:

"In making a takeover offer for the step up preference securities....we set a conversion ratio we believed would satisfy both classes of holders. Ultimately the lack of participation by the larger holders of SPS units caused the proposal to fail in achieving the intended outcome...."

So the Board believed, in spite of all the feedback from the larger PXUPA holders, and the target's recommendation to reject the offer, that the conversion ratio would "satisfy" both classes of holders!!

In the context of all that, how seriously idiotic is the Chairman's comment?

Furthermore, he states that it was the PXUPA holders (!!) who caused the proposal to fail, rather than the true cause: an offer from the Board that was materially deficient.

Shame on him. Not only is his further comment also seriously idiotic; it is highly offensive to PXUPA holders as a whole and to anyone with a modicum of intelligence.

Anyone who falls for his rhetoric needs to understand that:

(i) The PXUPA preference units are not quite debt, and not quite equity; they lie somewhere between.

(ii) If they were pure "debt", the offer would normally have been based on the $100 face value, then adjusted to the circumstances; after all, they'd rank above the equity.

(iii) If they were pure "equity", the offer would normally have been based on the underlying value of the equity - taking into account the much higher risk/reward associated with that equity.

Given that the offer was made far closer on the assumption of "equity" rather than on the assumption of "partly debt / partly equity", it was always doomed to fail.

500:1 would probably have done the trick - and given the speed with which Management have been making all the necessary operational changes, this deal should have been done and dusted in a wink.

Mr. Chairman - it's not the PXUPA holders who are raining on PaperlinX's progress. It's you and your Board who are pissing into the wind. Get real for heaven's sake.