you be the independent expert

When it comes to valuing this company, should it be on the basis of an ongoing operating entity, or as a sum-of-the-parts assets play?

As an ongoing entity, it really does have ongoing problems due to the industry conditions in which it operates. But management have been more than up to the task in terms of running things leanly, freeing up loads of cash to pay down debt, cutting payroll, rationalising their warehouses etc.

They're more or less breaking even, and are well-positioned to generate adequate returns in time, although it may be a few years yet before these returns are more than satisfactory.

But the value of CPI surely lies in the resources it is sitting on. Were it to wind-up in an orderly manner (say 18 months), I can't see why it couldn't tender a division or two to other industry players, sell surplus inventory at close to values listed "at cost" (it turns over inventory a number of times a year, so there's relatively little 'stale' paper or product), and return proceeds to shareholders.

They don't appear to have too much trouble in coming up with $12 million in cash - that's 20cps - at short notice!

Even if there were a 10%, 15%, or 20% reduction in book value as a result of all this, we'd still end up with an NTA of at least 65 cps.

Why are the Directors so keen on the deal? Their primary obligation surely is to recommend on the highest and best outcome for shareholders, not whether the Company continues as an important merchant to the Australian paper industry, or whatever.

My guess is for the Independent Expert to come up with a "Not Fair" conclusion, but with the proviso of "Reasonable" for those who wish to accept the offer price should they not be prepared to wait-out the company's pending operational turnaround.

[This is not to be taken as financial advice - merely, one shareholder's opinion. Further disclosure: I have in recent days sold part of my holding in order to raise some much-needed cash, but still hold the majority of my shares to see how this all plays out.]