NathanblackI agree with your maths, but there are also people...

Nathanblack

I agree with your maths, but there are also people and ambition involved.

This won’t last 5 years as Andrew Price is far more ambitious than that. Remember, after the AGM he will hold options exercisable at 50 cents.

The underlying problem is that when the PDS was drafted, no one ever contemplated PPX trading at 5 cents and the conversion ratio is enshrined in the PDS.

There is a prisoner’s dilemma at play. The share price of PPX will never materially improve with the hybrids in place. To think otherwise is fanciful.

The hybrids were in place long before Andrew Price arrived.

I understand he and his team are solving operational problems. Soon they'll have to address their hybrid problem. It won’t take 5 years, because he doesn’t have 5 years. I probably know him better than most here.

There is a lot of emotion here about the motives of PXUPA holders. Try this analogy:

Let’s say you buy a house with an 80% LVR mortgage, and you don’t pay your mortgagee for two years. Regardless of how nice a person you are, or the general improvements made to the property, the mortgagee takes possession and sells up the property. Any surplus goes to you.

OK, I understand the discretionary nature of hybrid distributions so don’t bother revisiting that. The benefit to PaperlinX over the last two years was $15 per PXUPA or $42.75m, without which it wouldn’t have survived. That is a fact and will need to be recognised in any “hybrid solution”.

Today, I see three possibilities:

(1) The turnaround is on track and the Board wants to be rid of the hybrids ASAP, for their own opportunistic reasons;

(2) The turnaround is on track and a third party makes a “whole of company” play for their own opportunistic reasons; or

(3) The turnaround is failing; in which case the risk to PPX is always greater than PXUPA.

Some folk here seem overly concerned about motives. Everyone recently involved in PaperlinX is opportunistic to a degree. It’s the nature of markets and distressed businesses. Get real.