Poor trading results push PaperlinX closer to the edge

Plunging revenue forecasts have crashed PaperlinX financials through the floor because of continued bad results from  the beleaguered company's chronically ailing European businesses.

In a sombre warning to prospective investors the company said the results may put at risk its ability to extend credit facilities with dire consequences, up to and including insolvency.

In its FY14 Guidance, PaperlinX projected that its business would be ‘marginally profitable' next year. However the company’s actual October financial results have come in ‘materially below’ the most recent forecasts with interim November results also showing a further decline.

Last financial year PaperlinX reported $123 million of net debt. The company’s largest debt funding facility in Europe was extended to September 2014, and PaperlinX will shortly enter into discussions to extend it again.

PaperlinX management currently believes it can still achieve its 2014 goals and is undertaking a re-examination of the outlook for its businesses.

The ongoing financial struggle is taking place against a backdrop of the company's efforts to resolve its ongoing troublesome hybrid stakeholder's demand for a greater share of the shrinking pie. The hybrid's off-market takeover debacle continues with the company releasing a Bidder’s Statement to shareholders, detailing the company’s recent trading results and risks related to the mooted share swap.

In a letter to shareholders Robert Kaye, PaperlinX chairman, with a gift for understatement said, “At the time of making the offer, the PaperlinX board strongly believed… that it would enhance value for PaperlinX SPS unitholders. While the PaperlinX board continues to believe in that rationale, it is mindful that as at the date of this Bidder’s Statement, there is some uncertainty arising from its recent trading results.”