Posts Tagged ‘PaperlinX’

  • PaperlinX offers hybrids a majority stake ahead of AGM

    A 250 shares for one security swap will potentially give hybrid security holders a controlling 54% of the troubled paper merchant if they all accept the terms. According to the company, hybrids who knock back the $14 offer are likely to be out in the cold after the deal goes down.

    The tortuous wrangling between PaperlinX and its step-up preference securities investors (hybrids) is coming to a head with the confirmed offer to swap 250 ordinary shares for every hybrid security. The hybrid investor support group (PaperlinX PIGS) has already knocked back the contentious deal but the board is confident it will be picked up by a good number of investors with a short-to-medium investment time frame.

    The majority of hybrid holders are a long way off from the original investors who got burned with the $100 securities when they were offered in 2007. Since then the securities have dropped 88% and most of the original investors bailed out, taking whatever they can get. The swap offer is pitched at making it attractive to the new investors, representing a 16.7 % premium at the closing prices on 21 August. The company warns those hybrid holders who do not accept the offer that they are likely to become minority security holders with potentially less influence over the future direction and control of the PaperlinX SPS Trust.

    There are few conditions to the offer and no minimum acceptance condition, which means that whoever takes it up gets the PaperlinX shares. It is unlikely that sufficient numbers will accept to change the majority control of the company.

    The alternative is that the hybrid PIGs will continue with a legal challenge already before the courts to force a better deal, which is been contested. According to the company, a protracted legal challenge is likely to materially disrupt and undermine the company’s operations and stakeholder and financier confidence.

    The hybrid/share swap offer comes ahead of what is sure to be a rambunctious AGM in Melbourne on Friday where Andrew Price, CEO, will front his critics and supporters. He said he is confident the shareholders will pass every motion proposed by the board.

    The AGM will also be seen though the frame of a more assertive stance by the company to potentially libellous comments about its ability to operate as a viable concern. Jeremy Martin, president of the Paper Industry Charitable Trust in the UK found himself having to issue a public apology for comments he made at an industry function in March. In a statement he said, I made comments… I now recognise were understood by many to mean that PaperlinX is insolvent, cannot pay its debts and is a credit risk. I retract my comments in their entirety and I apologise for any embarrassment caused.

     This heightened level of scrutiny is likely to keep the AGM a little more sedate than forecast.

     

     

  • Turnaround year for cashed up PaperlinX

    The paper merchant’s determination to revive its European businesses is due, in no small part, to the fact that it cannot sell them. According to Andrew Price, executive director responsible for driving the reconstruction of PaperlinX Europe, there are no buyers prepared to make a sufficient offer for the troubled European assets that have proven to be a drag on the company’s progress. Faced with the task of rationalising the different country operations, PaperlinX has cashed up its portfolio to give it the money to complete the job.

    Price maintains there is no alternative to the turnaround strategy already underway. “There is no one around prepared to make a half reasonable offer for the European assets, so we have made the commitment to fix it ourselves,” he said. “We have already brought all the continental companies under the one PaperlinX brand so as to better effect efficiencies.

    “We are starting to operate as a global business with a customer focus. Andy Preece from Australia and Cory Turner from Canada [managing directors of the successful entities] are now spending time with the European business to share their expertise. We have a great team and tons of cash to do what is necessary. I’m very confident in the future of PaperlinX, a lot more than I was twelve moths ago.”

    Price’s upbeat appraisal follows a watershed full year results for 2013 that saw debt slashed by 17% to $123 million even as volumes fell in extremely challenging conditions. PaperlinX posted an after tax loss of $90.2 million, down from $266.7m last year. The company has announced it expects to be marginally profitable next year. It has affirmed its financial position including capitalizing its German invoices.

    The Australian, Canadian and New Zealand companies all posted significantly improved results, throwing into stark relief that PaperlinX problems are mostly to do with its European operations. It is also why Price is returning to London to continue driving change in the region.

    “Europe is the problem and it’s not going to be an easy fix, but we’re determined to make it work. It’s not a one off project but a constant restructuring,” he said.

    According to PaperlinX, the European businesses revenue was down 12% in local currency – due to market decline in paper, and loss of market anticipated due to significant sales force restructuring. There was a 12% reduction in the number of employees throughout Europe.

    Underlying earnings in Australia & NZ of $13.0m were an improvement on last year’s $10.9m.The company said this result was achieved in extremely tough trading conditions where strong margin and expense control in Australia and New Zealand more than offset a volume shortfall.

    And then there are the hybrids

    In a bid to appease its fractious hybrid shareholders – investors that own PaperlinX Step-Up Preference Securities – the company’s board said it was exploring a scrip-based merger between the company and the PaperlinX SPS Trust. This deal would effectively see the hybrid securities exchanged for regular shares.

    The proposed option is unbinding and is in preliminary discussions with the Trust company. Additionally, the company said it was also considering a number of alternatives, but Price was adamant that the option proposed constituted a genuine offer.

    This was rejected by Graham Critcheley, convenor of the PaperlinX hybrid investor entity, PXPUPA Investor Group Supporters (PIGS), who claims the option put forward is nothing but a hollow proposal and is unlikely to come to fruition. This response was to be expected given the history between the two groups and to some extent between Price and Critchley.

    “There is no real proposition here,” said Critchley. “Right now, the conversion rate is about 1000 to one and if [Robert] Kaye thinks he can negotiate a deal, then he’s wrong. This is merely a non-binding discussion.”

    For Critchley, it is unlikely that the hybrid shareholders will accept the proposal by the PaperlinX board.

    “25 per cent of the total holders will block any proposal,” he said. “And, they’ve got to get the proposal up from the ordinary shareholders as well. They didn’t have those discussions until they became aware that we had lodged a substantial formal complaint. We’ve had a moral victory.”

    The PIGS held an online webinar prior to the publication of PaperlinX’s financial results on 21 August for concerned hybrid shareholders, which, according to Critchley saw some ‘feisty’ discussion. PIGS will hold second, post-financial results, webinar on 27 August at 5pm (AEST).

     

  • PaperlinX balance sheet stoush ahead of results

    Intense speculation surrounds the PaperlinX  full year presentation on 21 August as battle lines are drawn between Andrew Price, the executive director charged with turning around the company’s ailing European business and Graham Critchley convenor of PaperlinX Investors Group Supporters (PIGS).

    Price is flying back from London to face the disaffected PIGS in Melbourne who were once his strongest supporters in taking on the company. On 5 August, PIGS announced it would hold two webinars about the future of PaperlinX and its hybrid shareholders in light of the group’s expectations for PaperlinX’s second half financial result – scheduled for 21 August.

    In a statement, PIGS convenor Critchley , said:

    Unless the Board has pulled rabbits out of a hat, PaperlinX’s net equity position will have continued to deteriorate in the second half of FY2013, increasing risk for all stakeholders given its fragile balance sheet. We maintain this wealth destruction must stop now.

    A statement from PaperlinX rejects this: “As we indicated in our half year results, PaperlinX continues to make solid progress with its business transformation program.  We look forward to providing a full update to the market at our full year results announcement on August 21.  In the meantime, the Board is fully aware of, and compliant with, its fiduciary responsibilities and responsibilities to shareholders.”

    According to PIGs, the balance sheet should be of concern to every stakeholder – not just hybrid investors – and that the proposed webinars will be of interest to hybrid holders, ordinary shareholders and all other stakeholders in PaperlinX.

    PIGS says it intends to increase pressure on the board of PaperlinX to address what it calls an “obvious” problem. It also says that “hybrid holders have been ignored for far too long, and the unresolved capital structure is jeopardising the entire business.”

    Andrew Price, PaperlinX executive director

    The paper merchant has undergone over a year of massive upheaval, with former shareholder activist and current executive director, Andrew Price (pictured), toppling former chairman, Harry Boon, after a months-long leadership challenge and securing a place on the board himself.

    Price has since spent several months in the UK, working to streamline PaperlinX’s British operations. Last year, the company sold off its businesses in the US, parts of Europe and South Africa in a bid to stem losses and raise capital for its restructure.

    While the company has since made moderate investments in Sweden and New Zealand to add to its increasingly diversified product portfolio, the company saw a fall in local paper volumes for the six months ending December 2012, and recorded A$-57.3 million statutory loss for the same period.

    PaperlinX’s share price has settled around the 0.05c mark since the beginning of July – where it sits at the time of writing – from a six-month high in February of 0.10c. Five years ago, the company’s share price stood at over $1.75.

    Despite the first half loss for the 2013 financial year, the company maintains it is on track to return to profit in the financial year ending 2014, following extensive restructuring efforts.

    The first of the two PIGS webinars will be held on 13 August 13, 2013, which is about a week before the scheduled release of PaperlinX’s full year results for 2013. The group says it will set the scene for what to look for in PaperlinX’s FY2013 results.

    The second, post-financial results webinar will be on 27 August, with the group saying it will review PaperlinX’s full year results for FY2013 and discuss what’s in store in 2013/14 for all PaperlinX stakeholders, not just the hybrid holders.

    According to PIGS, this review is important, because under ASX disclosure guidelines, the FY2013 earnings should not now be materially different from the FY2012 earnings (over 10-15% above or below) – if the result is materially different an announcement should have been made.

    PIGS says that this could indicate another significant loss and thus a further reduction in PaperlinX’s equity base. As at December 31, 2012, PaperlinX’s net equity was $374 million, of which $285 million (76%) has been contributed by the hybrid holders; compared with $639 million twelve months earlier (hybrids then contributed 45%).

  • PaperlinX pushes diversification with Shanghai operation

    PaperlinX is pushing its diversification strategy with the opening of a new operation in China, with a new Shanghai office set to serve as a sales office for its international trading business and as an Asian sourcing and procurement base.

    The company’s decision to open a China-based operation forms a key part of its ongoing diversification strategy, designed to minimise its dependence on the global paper market and work to become a leading materials merchant while expanding revenue streams beyond its traditional commercial print offering.

    With a renewed focus on growth, PaperlinX is targeting expansion in non-paper products such as industrial packaging, and sign and display. The strategy has already seen it purchase two additional businesses in the past year – Canterbury Packaging in New Zealand, which it picked up for AU$2 million, and Swedish sign and display company, Cadorit, which it acquired for AU$1.1 million in June.

    Globally, the company has put in place a series of measures to simplify its organisational structure, revitalise and improve efficiency; moves that underpin its commitment to drive performance improvements, strengthen the balance sheet and restore profitability.

    The diversification strategy follows the complete turnover of the company’s board along with much of its management, record losses in the financial year ending 2012 and the subsequent sale of many of its businesses in the USA, parts of Europe and other global regions.

    Early this year, PaperlinX reported a statutory loss of A$57.3 million for the six months ending December 2012, although its earnings in the local region was up by $2.1 million from the previous year’s results to $7.8 million.

    PaperlinX says that the decision to consolidate its merchanting brands and trade throughout the UK and Europe has eliminated duplication in many areas and leveraging the power of one brand is, according to executive director, Andrew Price (pictured), helping the company to maximise its buying power.

    “Within our ANZA businesses, we source significant volumes of product from China,” says Price. “Opening an office in Shanghai gives us the opportunity to leverage our procurement power globally; this will further enhance the Group’s supply chain efficiency and better fits with a Group-wide commitment to streamline processes, as well as eliminate both cost and inventory duplication.”

    The company says that, in addition, having a single point of contact in China will encourage better collaboration between individual countries, facilitate information sharing and provide the PaperlinX group with access to a wider gamut of sales and sourcing options. According to the company, this resource will also fully support the bespoke branded web storefront initiative recently launched to the group’s UK customers and which will shortly be rolled out across Europe.

    PaperlinX intends to expand the existing 500-strong product offering in direct response to customer demand and will, in order to achieve greater cost efficiency and supply chain efficiency, source new lines via the Shanghai base.

  • Bye-bye Boon – Price wins PaperlinX leadership struggle

    PaperlinX chairman, Harry Boon, will leave the company on 28 September, along with his supporters, non-executive directors Lyndsey Cattermole and Anthony Clarke, in a boardroom coup that sees shareholder lobbyist, Andrew Price, win his battle against the company’s leadership.

    The company announced today (19 September), that Boon, Cattermole and Clarke have resigned from the board with their departure on 28 September only weeks before the next annual general meeting, scheduled for 31 October.

    The resignation of Boon and his two close boardroom non-executive directors is the final phase in the bitter  leadership struggle that shareholder insurrection leader, Price, instigated earlier this year with an extraordinary general meeting that was held at his bidding in March to decide on Boon’s future as chairman.

    After Boon secured his position as chair at the EGM, the company offered Price a position on the board, which he knocked back. However, in August, Price eventually took his position as a non-executive director on the board, after the company saw the departure of CEO, Toby Marchant, and sold off several of its international loss making paper businesses, moving towards a smaller but more diversified operational structure to combat its continuing poor bottom line financial results.

    The resignations leave only two directors on the board, Andrew Price and Mike McConnell. Sources confirm that replacement directors will be appointed well before the AGM in October.

    According to PaperlinX gadfly, Graham Critchley, convenor of the activist website, PaperlinX Sux, Harry Boon jumped before he was about to be pushed from the board. He says a notice for a 2nd extraordinary general meeting (EGM2) was about to be delivered to the company today.

    Critchley believes the numbers were stacked against the incumbent and he jumped ship rather than face an undignified bunfight at the AGM and EGM2. Presumably the demand for the EGM2 was coming from Andrew Price, who called the first one in March. Since then Price with a seat on the board is on track to become the executive chairman of the company, if he wants to. Price as not available for comment at time of going to press.
    Whether the change of regime will improve the prospects of the hybrid holders getting any money back from their investment is unclear. Undoubtedly the new board will be looking to realise the value of the company along the lines proposed by Andrew Price.

    There is plenty of room to improve with PaperlinX share price continuing its drastic drop to trade at slightly over five cents, half what it was in May.

     

  • The winds of change – 4 July 2012

    New position for Fuji Xerox Australia

    Fuji Xerox Australia has appointed the national manager of its Graphic Communications division, Simon Lane, to a newly created role, chief marketing officer. The new role will see Lane direct the business’s overall marketing strategy and implementation across Australia.

    According to Nick Kugenthiran, Fuji Xerox Australia’s managing director, Lane’s new position is an important appointment for the company.

    “As our Australian business continues to grow into a services business, there was a clear case for us to consolidate the leadership of our diverse marketing and communications initiatives,” says Kugenthiran. “Simon’s years of expertise in this space, coupled with extensive market knowledge and management skills, make him the ideal candidate to lead and extend Fuji Xerox Australia’s already significant marketing efforts for future growth.”

    Lane (pictured) said, “I am delighted to be appointed to this important role, given the remarkable brand heritage enjoyed by Fuji Xerox and our focus on the customer. As a business at the apex of technology, information and people, we continue to invest aggressively so that we can capitalise on opportunities in the emerging work place.”

    In his previous role as the company’s national manager of Graphic Communications, Lane led the division to dominant market share by expanding its offerings into other high-growth markets and channels.

    PaperlinX  secretary shuffles

    In its ongoing sweeping changes from the top down, PaperlinX announced this week the departure of company secretary, James Orr, who left the post on 30 June.

    Meanwhile, Wayne Johnston was appointed as an additional company secretary of the company, effective 1 July. The executive shuffle follows the company’s sale of two of its North American businesses and the continuing rationalisation of its operations, with moves away from its core paper businesses, to diversified products.

  • New PaperlinX CFO to move into UK head quarters

    Top end shuffles continue at PaperlinX with the company announcing this week the appointment of its new Chief Financial Officer, Richard Barfield, replacing the departing Tony Kennedy.

    Barfield, who will be based at the company’s UK head quarters, has most recently worked with two publicly listed companies, Northgate Plc, a UK-based commercial vehicle hire company active in several European countries and Spring Plc, a UK-based recruitment business.

    The company has publicly been on the hunt for a new CFO since early April when it announced that Kennedy would retire from his role on June 30 this year. While PaperlinX chairman, Harry Boon maintains that Kennedy’s decision to retire was not prompted by the turbulent events and financial performance struggles experienced by the paper merchant over the last year.

    However, in a statement released this week by PaperlinX, the company’s CEO, Toby Marchant (pictured) cited the soon-to-be appointed Barfield’s track record in regard to managing company restructuring processes. In the statement, released on May 31, Marchant said:

    Richard is a highly experienced and well respected Chief Financial Officer who has recently completed the turnaround and sale of Bezier Group in the UK. His experience and track record of improving the fortunes of businesses through restructuring and well considered management of the balance sheet will be invaluable to PaperlinX.”

    The new appointment is a move that will be watched closely by outspoken shareholder figurehead, Andrew Price, who announced this week on Twitter his decision to base himself in Oxford in the UK from June 12 to keep abreast of PaperlinX developments as they occur.

  • PaperlinX shareholder insurrection picks up pace

    “If the EGM was held today, the result would be completely different,” said Andrew Price, PaperlinX shareholder activist as he prepared for the first Sydney meeting of disaffected investors on Monday. He was referring to the company meeting in March where he lost a bid to oust the current chairman by as little as two percent of the votes.

    The standing room only Sydney meeting was the latest in a series of presentations Price is hosting to inform shareholders about the state of the company and his own plans to revive its fortunes. Following a number of Melbourne meetings where he spoke to over 300 investors, both retail investors and other who have a stake in investment funds, he believes there is now a very strong appetite for change.

    “Many investors didn’t have enough information at the time of the last meeting. Over 30 percent didn’t vote. It is my intention to help investors become better informed to they can play an active role in the governance of PaperlinX,” said Price.

    The continuing activism comes in the shadow of the presentation of PaperlinX Strategic Review to be presented by Toby Marchant, CEO, June 30.

    Price has undertaken not to press for any further shareholder meetings, with the caveat that he will change his mind if the company tries to do, “anything stupid, such as sell a profitable business asset to try to cover up the mess they’ve made.

    “I sincerely hope they have a better plan for the future,” he said.

  • Andrew Price worries PaperlinX will go broke this year

    Shrugging off his recent defeat in an attempt to unseat Harry Boon as chairman of the paper merchant, Andrew Price is scornful of Toby Marchant’s promise to return the company to profitability by 2014.

    In a return to the guerrilla campaign he is waging against the board, Price describes the CEO’s plan as nothing more than a sham designed to buy time from the shareholders and avoid accountability. Price claims that Marchant is unable to forecast the sales and profit situation within the timeframe.

    “How can you credibly say that a reduction in overhead will restore profitability by 2014 when you admit that you have no idea what the sales and gross profit will be for the same year,” said Price in a press release.

    “At the EGM I pressed the Chairman to at least provide earnings guidance for 2012 and he refused. Trying to get the Boon/Marchant team to commit to foreseeable targets is like trying to nail jelly to a wall,” said Price. “I couldn’t care less about pie in the sky promises for 2014. I am worried about 2012 and the possibility of insolvency this year.

    The renewed criticism comes after members of the board, including Marchant increased their personal shareholdings in the company. This was a bone of contention at the recent EGM where Price accused the members of not backing their own company.

    There is no doubt the Price campaign is a continuing distraction for the company, which today announced a restructuring of its brands, rallying behind the name Spicers to better project a strong identity.

    Price has said he will not challenge Harry Boon again for the chairmanship of the company, but it appears that does not limit him from delivering trenchant criticism and dire warnings.

     NEXT WEEK! Don’t miss an Exclusive Feature here as Toby Marchant talks to Print21 on the challenge to the board posed by Andrew Price, the corporate strategy he believes will turn around the company and the future of the paper and printing industry.