PaperlinX PE bid shears investors for $221m

An offer from an unidentified private equity bidder of $21.85 per hybrid investment unit, bought for $100 each in 2007, will see the stakeholders taken to the shearing shed.

A confidential report received by the Trust Company representing the hybrid investors has already downgraded the value of the instruments to $34 per unit. The Company has so far not released the report, despite demands from some of the investors.
(The hybrid instruments are Step-up Preference Securities (SPS) with the Trust Company being the independent responsible entity.)

The PE bid values PaperlinX at $117m although there is no certainty any firm proposal will ultimately be put or accepted. The company lost 80% of its market value last year and its shares are currently trading at 7.3 cents on the ASX.

PaperlinX has also received a number of offers for disparate parts of the business, but the Board has given no recommendation to shareholders other than to say it has not yet formed a view.

The offers come at a time when PaperlinX expects to report a loss of $26m for the first half of the financial year because of deteriorating trading and general economic conditions in key European markets.

Industry observer predict that a successful takeover is likely to see the company broken up with unforeseen impacts on the local paper industry. Within the Australian firm there is a already move to rationalise merchanting that will see the well-known Daltons brand disappear in favour of Spicers.