Posts Tagged ‘Price’

  • 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.