Letters, feedback, get it off your chest: 6 December 2007

Judging from last week's news, one of our readers wasn't too happy with the election results.

Re: Paper prices predicted to peak

And Mr Rudd and the unions will let it happen.

Raymond McCredden.


Re: Printing Industries chases down Kevin Rudd
What a waste of time, he speaks Chinese.

Raymond McCredden.



Dear Editor,
Re: Private equity is here to help you: opinion piece

James' articles are always interesting and he makes some interesting observations.

The share price of Penfold Buscombe was something I had a fair reason to keep an eye on!  It's not true to say that the price at the time of the Geon approach was around $!.

The reality was it was around the $1.50 mark. It had grown from around 30 cents in the early period after the merger, when the additional Penfold shares were issued to the Buscombe shareholders. The share market came to like the stock over time  as we paid regular dividends, and were making reasonable profits and the share price went over a period of time to around $2.30. This was a good performance as we need to face facts that the share market does not really think much of our industry (old world economy) and small cap companies many larger investors stay away from.

In the period around the Commonwealth Games the company had three bad trading months, of which we were not alone. Many companies in the media, including Fairfax, struck similar problems. Those of us in manufacturing know it's not all plain sailing and ups and downs are part of the life of a manufacturer. The share market did a ridiculous sell off totally out of proportion to the problem. The reality of the market is someone says something negative about you and it has a domino effect. I have to say that period created some good buying for others that weren't so pessimistic about the company.

The company share price had recovered around 50 per cent over the next few months and profits were being restored. Queensland had taken time to turn into a profitable operation with some more capital outlay, rather than what many would do and cut back or cut and run was starting to show improved results and then the emergence of likely buyers became a reality. The company wasn't looking to sell and was still looking at further expansion. The reality is as a public-listed company the board was in a position that they felt compelled to consider offers which eventually led to the board and shareholders eventually accepting the offer which was their right. The business was not up for sale, but rather being approach and offers made.

The continued mergers of companies in the industry will continue because it is the only way for the industry to go forward. We didn't buy and merge companies together because we liked planes, travel and hotel rooms far from home but because we saw it as a way of ensuring the future growth and success of the business.

The success of any merger is only possible if you have the right people with the attitude to make it work with everybody working together. The commitment and belief within the staff and management at the Botany plant when the Sydney businesses were all moved into the one plant after being scattered around Sydney and the people in Melbourne when we moved a lot of people and equipment from different sites into Mt Waverley is what made the Penfold Buscombe merger work.

The task for all the equity buy out companies is to ensure they have the staff working with them on their plans. The management must ensure that strong communication exists so that people understand the direction the business is going in. It's important to understand it is a highly skilled and technical industry that needs a highly skilled workforce. If you loose that you only have machines and buildings not a business. Most important of all your customers need to see that they are dealing with a business that is worth dealing with and committed to serving their needs. Without clients we have no business. The industry has a lot of challenges ahead of it. The industry of the past will never be like it was again. Only those with a really clear direction of where they are going and how they intend to get there will survive.

Chris Day 
former sales director Buscombe Limited
National sales Penfold Buscombe