PaperlinX SuX!

Corporate Governance Turning Opaque at PaperlinX

2013-04-25T17:47:00.000-07:00

Posted April 26, 2013 Twitter: @PaperlinXsuX

For an insight about what is happening behind the scenes at PaperlinX, click here.

The three main issues covered in detail are:

#1 Andrew Price’s opaque options package.

#2 Why change an independent chairman after just six months?

#3 Moelis to Assess Funding Options

Remember all the fuss about the $86 Man's directorship, see here. Recall that Andrew Price railed against the former board about lack of transparency?

Isn't it curious that the new board can now approve an options package for him that is well and truly outside ASIC guidelines. It's dodgy, be sure to read why.

suX believes this is just the tip of the iceberg for what is about to come. Standards of governance apparently change with incumbency.

Watch this space.

Anzac Day arrives early for someone at PaperlinX

2013-04-23T05:34:00.000-07:00

Posted Tuesday, April 23, 2013 Twitter: @PaperlinXsuX

Today's price action in PPX was extraordinary.

Something is amiss at PaperlinX and it's about time the directors made an announcement.

PPX opened at Monday's close of 7.4¢, fell to 5.6¢ soon after 3 pm and traded back to 6.3¢.

The EOD close at 6.5¢ was on minuscule volume. 5.6¢ was a drop of 24%. The close of 6.5¢ was still a drop of 12%. Check out the two day chart of PPX, plotted in 5 minute intervals, here.

The problem is that today's price action of PPX isn't consistent with Svengali's plan. Surely the idea is to enrich the ordinary shareholders (PPX) at the expense of the hybrid holders (PXUPA).

Maybe there's been a hitch? Could a third party now be involved with another agenda?

The share prices of PPX and PXUPA have been soft in recent times. suX has long expected the board to arrange an opportunistic 'low ball' offer for the hybrids.

I even expect it needs to be in place by June 30, 2013, to repair or 'window dress' the balance sheet, yet again!

There have been many independent confirmations of an imminent announcement. How can suX be so sure? For a start, certain people are now behaving out of character. Then there are rumours that usually reach suX.

PIGS is keeping a close watch on matters and will release further detailed material soon.

Watch this space.

Lest we forget

Greetings from Melbourne.

Putting PaperlinX in Perspective - 2013

2013-02-06T04:56:00.001-08:00

Posted February 6, 2013 Twitter: @PaperlinXsuX

Greetings and welcome to 2013.

Before the December half-year reporting season gets into full swing, we advise that PaperlinX PIGS (PXUPA Investor Group Supporters) has today released an overview of what investors may expect in 2013, including a calendar of important dates for PaperlinX in the first quarter, see Putting PaperlinX in Perspective - 2013

PIGS has released a new valuation of PPX & PXUPA

2013-02-06T04:55:00.002-08:00

Posted February 6, 2013 Twitter: @PaperlinXsuX

PaperlinX PIGS (PXUPA Investor Group Supporters) is pleased to advise the release of a recently completed independent research report on PaperlinX and a 'Sum-of-Parts' valuation of PPX and PXUPA.

It's detailed and will provide excellent insight for PPX and PXUPA investors alike, available here.

What's new at PaperlinX PIGS?

2012-12-18T05:36:00.000-08:00

PXUPA Investor Group Supporters (PIGS)

PaperlinX-suX is a metaphor, whereas PIGS is the future for PXUPA hybrid investors.

Learn about PIGS here. Hybrid investors should register their holdings here. Supporters are always welcomed here.

Latest updates made on December 18, 2012

2012 Year in Review An end of year update covering PIGS’ progress and significant events for PXUPA hybrid holders over the course of 2012.

PXUPA vs. PPX equity chart gallery This shows different views of PXUPA hybrid equity and underscoring its importance in funding PaperlinX. A must view by PPX and PXUPA holders alike.

PIGS History Why and how it started.

PXUPA Valuation Tool Down loadable Microsoft Excel worksheet that allows you to calculate the present value of the PXUPA hybrid using your own assumptions on payment dates and discount rates. It illustrates how a low valuation ($23) can be ‘manufactured’ simply by using a high discount rate.

PIGS is a committed group of volunteers formed in early 2012 specifically to protect the rights of PaperlinX hybrid investors - particularly those who cannot speak for themselves.

Our objective is to ensure that every vote counts; and that any outcome for PXUPA holders is fair and equitable.

Global paper ROFL as $2bn frittered. suX to retire.

2012-12-12T19:14:00.000-08:00

Posting #362

Posted December 12, 2012 Twitter: @PaperlinXsuX

How and why PaperlinX was bound to fail from day one, losing $2b in a decade of denial.

As this is my second last post (no bugles please) suX will attempt to join some of the dots in this riches to rags story called PaperlinX.

This is a 'big picture' view of events over a decade. It is the personal opinion of the author and isn't investment advice.

A classic ROFL.
George W looks on,
unknowingly.

What is ROFL?

Rolling On the Floor Laughing, ROFL, is commonly used to express that you are laughing so hard that you are rolling on the floor.

ROFL is used in text and the new media.

Does George W remind you of anyone at PaperlinX? He should.

ROFL best describes what the world of fine paper has been doing about PaperlinX and its bumpkins from down under for a decade.

Where is PaperlinX today? The 2002-03 extravagances of Bunzl and Buhrmann are still a costly legacy. All that has changed is that a problem has been identified, but not solved.

Possibly PaperlinX will be forced to return to its roots, Australia and New Zealand, and rebuild again.

Just for the record. suX and Andrew Price are natural adversaries (PXUPA vs. PPX) however reality necessitated an alliance to effect change at board level and beyond.

We both acknowledged this to ensure there was something left to fight over post Boon/Marchant. It worked. More in the last posting.

Suffice to say, everyone wants Price and the new board to succeed - suX just doesn't want it to occur at the expense of the PXUPA hybrid holders.

Truth behind ROFL: ask the people who know the inside stories.

You've probably debated this topic: If you could invite any guests to a dinner party, dead or alive; who would you invite? The usual responses are the obvious; Adolf Hitler, Winston Churchill, Oscar Wilde, Jesus etc.

For suX, totally absorbed by PaperlinX, it would be these eleven folk as they've all been closely involved with this riches to rags story.

Many have benefited from PaperlinX, and some have lost heavily. Others still await an outcome.

I'll also share with you some questions I'd like to ask each of them, preferably after a few drinks.

Later I'll briefly revisit some key turning points in history and try to connect the dots, which will explain some of the questions.

First, allow me to introduce my eleven guests:

(1) Harry Boon:

Non-executive director from May 5, 2008.
Non-executive chairman from September 1, 2011.
Narrowly survived a challenge to his chairmanship launched on February 3, 2012.
Dumped in a boardroom coup on September 18, 2012.

An undeniably shaky tenure as chairman of PaperlinX for just over a year, the second half being marred by the collapse of another ASX company of which he'd been a non-executive director for seven years.

2012 was his annus horribilis. For Harry, the worst must have been this assessment by the normally conservative Australian Shareholders' Association (ASA):

"... the ASA is troubled by the billions which have been lost at Paperlinx and Hastie and believes Mr Boon’s public company director career should conclude." see here.

Seems he put others, besides PXUPA holders, seriously offside.

Questions for Harry Boon:

Why did you need or want so many directorships?
Why didn't you engage with the hybrid holders from day one?
When did you accept that Toby Marchant was a mistake?
Why did you consent to Milton Keynes?
Why did you let Chris Creighton, arguably the most successful senior executive in the Group, go with sale of the USA operations?

(2) Toby Marchant:

Inherited by PaperlinX with the acquisition of Buhrmann's Paper Merchanting Division on November 1, 2003.
Rapidly rose through the ranks to become CEO and MD on November 1, 2010 (7 years).
Sacked on July 17, 2012.
624 wasted days.

Question for Toby Marchant:

Did you ever lead a paper business that made profits? The brevity of "Yes" or "No" will suffice.

(3) David Meiklejohn:

Chairman 2000 - August 31, 2011 (11.5 years).
Appointed Chairman of PaperlinX by Amcor.
He had been a Director of Amcor since 1985 and its Chief Financial Officer since 1981 (19 years).
He played a significant role at the Melbourne Cricket Club (home to the world famous MCG) where he'd been a Committee Member since 1987; Treasurer, 1992-2001; Vice-President 2001-2007; and President, 2007-11.
While he was President of the MCC, the market cap of PaperlinX under his concurrent Chairmanship fell 85% from $1.617 billion (Dec 2006) to $247 million (Dec 2010).
What a glorious corporate epitaph.

Questions for David Meiklejohn:

Do you think is prudent that people should go straight from CFO to Chairman without first proving themselves as CEO?
As an acknowledged CFO, weren't you ever concerned that PaperlinX's offshore acquisitions were too hasty?
How long can a business destroy value before a chairman accepts responsibility?
Did you know that Ian Wightwick (your Amcor appointed MD) intended resigning in 2003?

(4) Ian Wightwick:

Managing Director 2000 - January 31, 2004.
Ian Wightwick was appointed MD of PaperlinX by Amcor.
He had been with the Amcor group since 1981.
He was appointed Chief Executive of Amcor Printing Papers Group (APPG) in 1998.

APPG, together with Amcor's 42% investment in Spicers Paper Limited, a listed paper merchant, is what became PaperlinX Limited in early 2000.

Questions for Ian Wightwick:

Why did you accept the position of MD when you intended to retire in under four years and there was no obvious succession plan in place?
Did you truly believe you could grow PaperlinX from a modest ANZ business to a global leader in just four years?
Did anyone counsel you that being CEO of a stand alone listed entity is far more complex that being CEO of the same business operating under the wings of a strong parent?
Do you think it's a good look for a senior executive to wear two mobile phones on his belt? (courtesy of a whistle blower in attendance at a senior management meeting in the UK in 2003)

(5) Tim Elliott:

Third generation leader of the conservatively managed Elliott Baxter & Company Limited, Mr EBB.

Question for Tim Elliott:

Tell us truthfully, how much money have you made from PaperlinX's incompetence in the UK alone? To the nearest £10 million will suffice.

(6) Andrew Price:

Barely needs introduction as is known to all by now.
Successful entrepreneur in print management following a career at Spicers Paper, NSW, where he was a colleague of Chris Creighton.
Currently executive director without portfolio, resident in the UK and Europe.

Question for Andrew Price:

Did you fully understand the PXUPA hybrids before embarking on this exercise of "saving" PaperlinX?
Do you accept that the board needs to restore the balance sheet of PaperlinX in 2013?
How does the board intend to achieve this without screwing the hybrid holders?
Given your background in logistics, what plans do you have for Delivery Co?
When will the board release your salary and incentive package?

(7) Chris Creighton:

President of North America, Australia, NZ and Asia (the PaperlinX world ex Europe) until "let go" upon sale of USA operations in June 2012.
32 years of continuous service and considered by good judges to be the best paper merchant around today.

Questions for Chris Creighton:

"Off the record", what would you like to say to the previous boards?
Were you treated fairly on termination, as espoused by Harry Boon at the EGM, or "above and beyond contractual obligations" as espoused by Toby Marchant?
Would you ever work for PaperlinX again?

(8) Lyndsey Cattermole:

Non-executive director from December 21, 2010, until dumped in a boardroom coup on September 18, 2012.
Known to be a strong supporter of Harry Boon and sits on the board of Tatts Group where he is chairman.
Was the only former non-executive director to make a substantial investment in PaperlinX shares.
Successful entrepreneur, all round high achiever and serious A-Lister in Melbourne.

Questions for Lyndsey Cattermole:

Truthfully, why did you ever become a director of PaperlinX when it was obviously on the skids in late 2010?
Did you support Harry Boon till the end?
Are you proud of your time at PaperlinX?

(9) Anthony Habgood:

Anthony Habgood was chairman of Bunzl when it sold its Fine Paper business to PaperlinX in 2002, see here.
From 1991 to 2005, Habgood was Chief Executive, then Chairman of Bunzl, growing turnover from continuing operations from £500 million to £2.9 billion, and improving profits by a factor of 34.
He is widely credited with transforming Bunzl.

At the time of sale, Bunzl Fine Paper had sales of £318m and an operating profit of £15.5m (4.9%) which represented only circa 7% of Bunzl group operating profits.

Questions for Anthony Habgood:

What do you think of the recent performances of the fine paper industry generally, and PaperlinX specifically? He ROFL.
Seriously, how pleased were you to finally exit the paper business after 100 years? More intense ROFL.

(10) Alfred Heinzel:

President and CEO of Heinzel Holding GmbH of Vienna, Austria.
Heinzel acquired the CEE operations of PaperlinX in 2012.
Heinzel Group makes serious money out of paper, see financial summary here.
Today, its annual net income exceeds PaperlinX's market cap.

Questions for Alfred Heinzel:

As a significant, but not substantial (>5%) shareholder of PaperlinX in March 2012, who did you support at the EGM - Boon or Price, and why?
Do you consider the price you paid for the recent acquisition of the CEE operations of PaperlinX to be a full price, a fair price or a bargain? He ROFL.

(11) Simon Marais:

Managing Director and Portfolio Manager, Allan Gray Australia, formerly Orbis.
Holds 18.29% of PaperlinX and is a Price supporter.
High profile contrarian fund manager voted the Human Headline of FY 2012, and tagged the "CEO slayer" see here for a 'must read' personal profile.
Apparently PaperlinX is his worst investment ever, with losses estimated at circa $70 million.

Questions for Simon Marais:

How did you let Toby Marchant fool you?
Why do you hate the PXUPA hybrid holders when at least two of your senior analysts are long term holders?
What must the new board do to retain your support?

Wine sommelier for the dinner will be none other than Awesome Orr. The man who sees and hears everything yet apparently knows nothing.

Connecting the dots: The dots start in Vienna, in 1888; and revisited there in 2012.

After commencing a haberdashery business in 1854, the Bunzl family relocated to Vienna in 1883 and commenced paper manufacturing in 1888.

Following the occupation and annexation of Austria into Nazi Germany in 1938, the Bunzl family emigrated from Austria with the majority settling in the UK. Tissue Papers Limited was established in the UK in 1940.

Following WWII, the family reclaimed its Austrian assets and in 1952 the UK business became Bunzl Pulp & Paper Ltd. Bunzl has been listed on the London Stock Exchange since 1957 and is a constituent of the FTSE 100 Index.

Bunzl's last link with the paper industry was severed in 2002 with the sale of its fine paper distribution arm to PaperlinX.

These days Bunzl is a global logistics business. Ironic, as one of the key challenges facing all paper merchants is logistics; Andrew Price made his money in print management, which is really a sophisticated form of logistics; and sold that business to Toll Holdings which is Australia's largest transport and logistics group.

Harry Boon was a director of Toll Holdings when Price sold it his print management business, reportedly for a motza; so Boon knew more than most about his nemesis.

Ah, sweet irony abounds in most corporate intrigues.

Despite the adversity of WWII, see details in company histories here or here; the Bunzl story is about survival through persistence and innovation. As seen above, Anthony Habgood was no slouch either.

February 2000. Amcor announced floating a new company on the Australian Stock Exchange to own the paper manufacturing and distribution businesses then conducted by its subsidiary Amcor Printing Papers Group (APPG), as well as its 42% investment in Spicers Paper Limited, a listed paper merchant. The new entity PaperlinX was intended to dominate the Australian paper merchanting business .

A detailed announcement is available here. Two stand out points for the purposes of a serious retrospective ROFL:

"PaperlinX will operate manufacturing and distribution sites in Australia and New Zealand [only] with total sales in excess of $1.5 billion."
"The Board of Amcor has commissioned an independent expert, ING Barings (Australia) Pty Ltd, to prepare a report as to whether the proposal is in the best interests of Amcor shareholders." It certainly was.

2002. With the AUD weak by historical standards, buying just USD 52¢ in the first half of 2002; the PaperlinX board thought this was the time to use a weak currency to buy another offshore business far removed from its previous rapid Pacific Rim expansion.

They chose to buy from Bunzl which was exiting paper after over 100 years in the business.

Clearly Messrs Meiklejohn and Wightwick hadn't read much economic history, and must have thought they were smarter than the Bunzl family and Anthony Habgood. Oh dear.

And the already rapid Pacific Rim expansion, see 4 Years of Hubris - the Wightwick Years, was fully bedded down; wasn't it?

Not content with the minor yet manageable strategic blunder of Bunzl Fine Paper, they immediately embarked upon further European expansion by buying Buhrmann.

Buhrmann was a massive leap. At June 30, 2003, PaperlinX had a market cap of $1.9 billion and embarked upon a $1.3 billion offshore acquisition with what was still a relatively weak currency at USD 60-65¢.

Apart from momentary extremes of the GFC, the AUD has never revisited USD 60-65¢ since 2003. Still PaperlinX complains about the AUD in its annual reports!

June 2003 was the beginning of the end of PaperlinX. I realise this is a bold assertion, however that's how I read the history.

The ASX announcement PaperlinX to take major strategic step in Europe and presentatio n were dripping with hubris. The type that usually precedes a big fall.

The funded by 75% debt and 25% by issue of new shares, the "New PaperlinX" would now have 10,000 employees in 29 countries with sales of $9 billion.

Messrs Meiklejohn and Wightwick enjoyed solid careers at Amcor, but there was nothing to indicate that at their ages and stages in life they had the experience to take PaperlinX from a niche ANZ business, with sales of $1.5 billion, to a global business in 29 countries with sales of $9 billion, and in three years to boot.

Acquiring Bunzl Fine Paper was imprudent. Acquiring Buhrmann 12 months later was stupidity.

August 14, 2003 - Ian Wightwick resigns. Concurrent with release of the 2003 Preliminary Results, MD Ian Wightwick announced his retirement. Regrettably, today there is no obvious reference to this on the ASX; and no planned successor.

He reportedly took a $1.9 million package for effectively playing 'strategy' games for three years, using OPM, and paying scant attention to implementation. What fun as one's last job.

September 19, 2003 - Share price hits all time high: It's a matter historical record that PaperlinX's adjusted share price hit an all time high of $5:37 on September 19, 2003, as shareholders over-subscribed the share issue to part fund the Buhrmann acquisition.

It's been downhill ever since, closing at 4.1¢ in July 2012. That's a cool -99.2%.

October 2003 defined disaster for all to see.

The October 23, 2003 Managing Director's Address explains exactly why PaperlinX would fail. I specifically refer to paragraphs 7-9 on page 1 and paragraph 4 on page 3.

The big ROFL. Why didn't everyone else see this at the time? Actually, I think many global fine paper players did amid extremely rewarding personal financial ROFL.

The internal blindness is simple. When one person dominates a failing business for so long (11.5 years), and fails to accept their reality; it behoves everyone else to go along to get along.

This allowed certain personalities and business practices to survive and prosper until the money ran out.

Vienna, 2012

When the money runs out the bankers step in. That occurred in 2009-12. Then the vultures and opportunists step in, which happened in 2012.

I find it ironic that the most recent sale of a PaperlinX business was its CEE operations to Heinzel in Vienna. ROFL Mr Heinzel.

Where is PaperlinX today? The extravagances of Bunzl and Buhrmann were still in place until very recently. All that has changed is that a problem has been identified internally, but not solved.

Possibly PaperlinX will be forced to return to its roots, Australia and New Zealand, and rebuild again.

Summa summarum: This is my second last posting as suX.

In future, I'll be devoting my entire energies towards restoring value to PXUPA hybrids through PaperlinX PIGS.

"a committed group of volunteers formed in early 2012 specifically to protect the rights of PaperlinX hybrid investors - particularly those who cannot speak for themselves.

Our objective is to ensure that every vote counts; and that any outcome for PXUPA holders is fair and equitable."

Retirement means no more publishing of leaks from Northampton, unless they're mega juicy. It means no more direct personal attacks and hopefully no more threats of defamation.

Sadly, it also means no more illustrations, like this random selection available at FINIS - No more illustrations like these from suX.

Go on, check it out and have a jolly ROFL one last time. No one will know.

Usque ad Finem

"To the very end"

Finis - No more illustrations like these from suX

2012-12-12T19:08:00.000-08:00

Posting #364

Posted December 12, 2012 Twitter: @PaperlinXsuX

Retirement means no more publishing of leaks from Northampton, unless they're mega juicy. It means no more direct personal attacks and hopefully no more threats of defamation.

Sadly, it also means no more cartoons or illustrations like this random selection.

Clicking any image should give a larger in a new window.

What's this truck doing here?

Not yet

Usque ad Finem

"To the very end"

PaperlinX hybrid holders call for Sunshine Test

2012-11-23T04:09:00.001-08:00

Posting #361

Posted November 23, 2012 Twitter: @PaperlinXsuX

The Inaugural Annual Open Meeting of the PXUPA Investor Advisory Committee sets a clear tone stressing the importance of transparency and illustrating the absurdity of hybrid unitholders representing over 60% of PaperlinX’s equity and having no rights or control over their capital. See here.

Be sure to read the Comments Section.

A good read if seriously concerned about the balance sheet of PaperlinX. See Applying the Sunshine Test to save PaperlinX.

PPX UK has a new customer-centric sales strategy

2012-11-20T11:04:00.001-08:00

Posting #360

Posted November 21, 2012 Twitter: @PaperlinXsuX

Below is the text of yesterday's (Tuesday UK time) press release which is the start of long overdue brand consolidation in the UK. The original is here.

It received excellent same day coverage in PrintWeek, here.

Although absent in name, this has Andrew Price written all over it. Having returned to the UK on Friday, what took him so long?

Press Release

20^th November 2012

PaperlinX announces new customer-centric sales strategy

PaperlinX has unveiled a new sales strategy that will further improve the Group’s Commercial Print division’s customer-centricity, performance and profitability.

PaperlinX is to reshape its Commercial Print division to enhance the sales function across all three of its companies - Howard Smith Paper Group, Robert Horne Group and PaperCo to better meet its customers’ needs.

PaperlinX will create one unified Account Management Team, providing customers with access to the Group’s entire product portfolio that includes paper, packaging, graphics, digital wide format printers and print consumables and separate credit facilities, via a dedicated Account Manager. This will guarantee that all its products are represented in the UK & Ireland by specialist teams with expertise and experience relevant to the needs of each individual customer.

Ongoing market challenges and the changing needs of customers have driven the decision to change the way the Group delivers customer service.

“We are adapting our current structure to enable us to meet the needs and challenges of an ever-shifting market; where the global decline in paper sales has made a deep and lasting impression on the way we sell and on the customers we sell to,” says Commercial Director Ian Hunt.

“Our customer research revealed that 80% of our revenue comes from customers that deal with more than one PaperlinX company. By unifying product sales across Howard Smith Paper Group, Robert Horne Group and PaperCo, we are placing customer-centricity at the heart of our overall sales strategy. We are providing customers with greater choice; access to a broader portfolio of products, breadth of support and superior service levels, from a single dedicated Account Manager,” says Hunt.

Amidst a highly competitive business environment, PaperlinX has been undertaking a series of measures to revitalise and improve efficiency within its customer sales and service operations, drive performance improvements and improve profitability. The Group will continue to implement other cost reduction initiatives. This latest move that also includes creating a dedicated new business team, signals its commitment to building a business model fit for future growth.

At this stage there are no plans to change its local branch infrastructure that includes Robert Horne Group’s dedicated Northampton-based Customer Service Centre and PaperCo and Howard Smith Paper Group’s regional branches.

“We are now in a fantastic position to offer customers an outstanding range of products supported by great service, so we can continue to help them add value to their businesses,” says Hunt.

ENDS

For more information
Philippa Charlton, PaperlinX Marketing Director
Tel: 01604 732247

AGM #3 Did you ever think you'd see this?

2012-11-15T20:29:00.001-08:00

Posting #359 AGM Report #3

Posted November 16, 2012 Twitter: @PaperlinXsuX

Troika at lunch post 2012 AGM.
What was each thinking at the time?
Photo courtesy of "ball-breaker".

Left: Andrew Price, executive director without portfolio and principal PPX agitator for change.
Right: Graham Critchley, aka suX, principal PXUPA agitator for change.
Standing: Dave Allen, interim CEO and the man charged with delivering change.

Dave got into the spirit of things by removing his jacket and tie, but only undid his top shirt button.

Raymond Gonzalez

Looking on was Raymond Gonzalez who recently snapped up a 5.5% holding in PaperlinX ordinary shares (PPX).

Smile Raymond; it's only money.

Or was he thinking of his long trip to Northampton that night, with Price and Allen, for a detailed review of ops - post acquisition no less?

Also in attendance were Bill Isbaih, Craig Dartnell, Scott Wallace, John Conte, Laurence Rodny and David Leach - all original Price supporters down from Sydney for the day.

Andrew Gunn, gentleman third generation Melbourne printer was also present. He's the man who initially called Andrew Price away from early retirement in France to look at rescuing PaperlinX.

Robert Kaye SC, non-executive director, rounded out the group.

It's estimated the table conservatively spoke for in excess of 15% of the PPX share register. suX was representing PXUPA Investor Group Supporters (PIGS) which presently speaks for about 35% of the hybrids.

Dave Allen now knows what engaged private Aussie owners look like. You'll note that Gonzalez and suX dressed for the occassion.

Shark fin soup would have been appropriate for this gathering. It's popular for major occasions such as weddings, banquets and important business deals; and there was no shortage of sharks in attendance.

Being serious for a moment. Everyone is capable of change. It's the human condition that most of us don't change until it becomes too uncomfortable not to change.

Today we saw change in abundance in the tone of the AGM. The directors are committed to change. The Chairman's comment on the Remuneration Report is not your traditional directors' club whitewash. It's about as brutal as is politically acceptable, see here.

As far as suX can ascertain, Messrs Barker and Kaye aren't seeking careers as professional directors. Even if he wanted one, Andrew Price probably disqualifies himself by virtue of his direct hands on approach. Finally, we have an aligned board.

What of Dave Allen? He has either accepted a poisoned chalice or has been presented with the opportunity of a lifetime. No one at that lunch gives a rat's about the past and whether he is ranked #6 in PrintWeek UK's Power 100 2012, here.

He has an unambiguous job spec and support of the board and key investors For the record, below is a true copy of a question asked by suX at the AGM.

This question could easily have been disallowed by the chair, but it wasn't because it needed to be asked publicly. There's no point in being coy in times like these. It's not the Australian way.

Dave started shakily by slipping into corporate speak but soon got 'on song' because that wasn't the mood of the meeting.

Andrew Price also responded by supporting Dave Allen. The challenge for management is how quickly the message is embraced by everyone. If this sounds vague, kindly review the Chairman's address to see where we're going.

Here is the question:

"Mr Allen, As many here would know I’ve been a vocal advocate for change. The new board has appointed you interim CEO and naturally I support the board’s decision. However, your appointment does raise an interesting question of culture.

You’ve been a senior executive within PaperlinX Europe for well over 7 years. No one would dispute the fact that this region, over the same period has been a total disaster.

You’re the sole surviving senior executive of PaperlinX worldwide for the period 2008 to late September 2012, when there was an abrupt change of board.

We’ve seen that the new board represents dramatic change; reinstatement of the 2012 bonuses is one example which I’m sure you’d well recall.

This is pretty dramatic stuff to observe from the outside - management appears to be in back flip mode.

My question is: Would you care to share with us how at this age and stage of life you have managed to change, in just 7 short weeks, from being a major participant in 7 years of under performance to now delivering the aspirations of the new board and maintaining the confidence of your team?"

Remember Ross Perot?

Billionaire businessman best known for running for President of the United States in 1992 and 1996, and two successful start-ups, here.

“We have to succeed, so we will.”

“Eagles don’t flock, you have to find them one at a time.”

My favourite Perot quote relevant to PaperlinX today:

“Talk is cheap. Words are plentiful. Deeds are precious.”

AGM #2 Strategic quotes from AGM

2012-11-15T18:49:00.000-08:00

Posting #358 AGM Report #2

Posted November 16, 2012 Twitter: @PaperlinXsuX

I encourage anyone interested in the future of PaperlinX to read the Chairman's and interim CEO's addresses, and especially the Chairman's comments on the Remuneration Report, all three here.

Key takeaways for suX were:

Chairman's address, pages 1-6

"The board is fully committed to ensuring PaperlinX's cost base is recalibrated to be ahead of the structural decline curve."

Andrew Price is appointed as an Executive Director without portfolio for six months, but this may be extended. He'll be based in Europe. His "modest" fixed remuneration is still being finalised (ie it won't be $50,000 per calendar month) and will include an incentive related to share price. Is that over six months?

"Our goal is to return to profitability by FY2014 subject to dealing with our businesses in the Netherlands and Germany."

Interim CEO's address - pages 6-10

"If we cannot fix our loss making businesses in the Netherlands and Germany we will sell them."

"We have begun to 'challenge the unchallengeable', as we move towards a more transparent and accountable culture."

"restructuring in the 2013 financial year will see 370 people leave the business"

"drive a cultural change of urgency, transparency and accountability across our Group."

Chairman's Comments on the Remuneration Report - pages 11-12.

This is a must read. What suX particularly warmed to was:

"The financial year 2013 incentive plan will have more emphasis on profit so that it is more directly aligned with shareholders' interest."

suX Sumary

The obvious needs to be stated: If PaperlinX Continental Europe is without France and Italy; and possibly Germany and the Netherlands, what's left?

Reading between the lines, Germany and the Netherlands are at decision time; possibly already on the block.

The sole focus is now survival then ROE%. How novel.

Forget “We can’t shrink our way to prosperity” This was last utterance of a past era only six weeks before Toby Marchant was forced to start laying off staff and closing his Milton mausoleum. Full story here - Will PPX survive the imminent recession?

The 56% vote against the Remuneration Report confirms the new order of things. It reflects the Price + Orbis numbers + Australian Shareholders' Association vote, and means Price now firmly controls > 50%.

Nothing and no one is sacred. Don't say suX didn't warn you.

FINALLY, PaperlinX is now a different business.

Not yet,
but the medication might kick in soon.

AGM #1 Who's the blond with Andrew Price?

2012-11-15T01:49:00.001-08:00

Posting #357 AGM Report #1

Posted November 15, 2012 Twitter: @PaperlinXsuX

Digital edition of the Australian Financial Review
Thursday afternoon, November 15, 2012.

Posted for posterity as it's doubtful that PaperlinX's AGM will be front page news in tomorrow's print edition.

Directors voting against the remuneration report is an attention grabbing headline. The "huge number" of shareholders reflect the Price support group which explains why the old board resigned
en masse one night in late September. More about that later.

BUT, there was a lot more to this meeting.

Regrettably none of the mainstream financial press were present. This is a sad reflection upon the Australian print media as suX was previously advised that both the Australian Financial Review and The Australian were scheduled to attend. Scarcity of resources for quality journalist is a serious problem.

In part its symbolic of PaperlinX's problems.

For the first time in years there was something honestly positive to report about this fallen icon of the Melbourne establishment, and the press didn't hear it. It had to be heard to be understood.

According it falls to this humble organ to be the journal of record of PaperlinX's 13th AGM. The AGM will be reported upon progressively as suX is a volunteer.

In summary: Probably for the first time in years the word "transition" can be honestly applied, yet it wasn't once uttered at the meeting.

I refer to a transition of attitude and tone of meeting; not another feckin litany of excuses and lame duck corporate waffle.

The few stoic long term investors in attendance would have recognised the final stage of grief - acceptance. There were none of the former haughty denials by the board and resultant anger by investors.

The new brigade of investors, inappropriately decried as "opportunists" by former chairman Harry Boon, have hope in abundance.

Acceptance and hope is where we're at; at investor level.

More soon ...

Posting #356 2nd Update - 200 confirmed redundant

2012-11-14T12:46:00.002-08:00

Posting #356b Second Update

Posted November 15, 2012 Twitter: @PaperlinXsuX

emailed at 9:33 am UK time, Wednesday

The next two days will be interesting.

Posting #356 UPDATE

2012-11-14T06:19:00.002-08:00

Posting #356a UPDATE

Posted November 15, 2012 Twitter: @PaperlinXsuX

Further to the post 20 minutes ago, one normally reliable source in the UK advises the imminent announcement of disbanding the three company policy - at least at the customer interface.

Stay tuned.

I'm off to bed as the AGM starts in 8 hours.

More layoffs in UK - PaperlinX AGM news update

2012-11-14T05:56:00.000-08:00

Posting #356

Posted November 15, 2012 Twitter: @PaperlinXsuX

suX understands that Dave Allen has just announced there will be 200 redundancies in the UK by June 30, 2013.

Nice timing on the eve of the PaperlinX AGM about to commence in less than nine hours.

No doubt suX will have more info soon and a complete AGM wrap tomorrow night.

Applying the Sunshine Test to save PaperlinX

2012-11-13T07:35:00.000-08:00

Posting #355

Posted November 14, 2012 Twitter: @PaperlinXsuX

You never see cockroaches and sunshine together.

Sunshine is nature's disinfectant. It's universally available and free.

The Sunshine Test is a simple yet powerful ethical guideline which can be summed up in one sentence: "If you think it would look bad if someone else knew, then don’t do it."

That "someone" could your spouse, your children, your boss, your colleagues or more broadly the press. Maybe even your entire networks of friends and family. The beauty of the test is that it implicitly takes into account society's values (as expressed by your friends/peers).

Contrary to the “nothing to hide” argument, the Sunshine Test doesn't mean that everything should be public, merely that you should be prepared for the possibility that what you do may one day be made public.

And since everything becomes public by default, this possibility is increasingly likely.

The Sunshine Test applies to everyone. suX is totally transparent. Senior management at PaperlinX know who I am, where I live, my level of investment and my agenda. The former board didn't understand that I have the time and desire to pursue my agenda.

This blog isn't about making friends but achieving justice for PXUPA hybrid holders. If it helps ordinary PPX shareholders and employees then that's an added benefit.

Logically we all succeed or fail together; it's only a matter of degrees of success or failure.

The Sunshine Test starts with transparency at board level.

Michael Barker,
Independent Non-Executive Director
& Chairman

Robert Kaye SC,
Independent Non-Executive Director

Andrew Price,
Independent Non-Executive Director

Our non-executive directors know right from wrong.

None have personal or professional reasons to protect their predecessors from alleged wrongdoings.

Once this is clearly demonstrated, and accepted throughout the company; then alleged complaints should rapidly disappear or be resolved once and forever.

At times of dramatic change, as has recently occurred at PaperlinX, the incoming board is morally obliged to rid the organisation of its intrusion of cockroaches. For an explanation about Cockroach Theory and corporations, see here.

Wholesale and abrupt changes occur for a reason. At PaperlinX there needs to be a total change of culture led by the new board.

Reversal of the revoked 2012 bonuses is an example of the Sunshine Test at work. It occurred as soon as practical after the recent board change. Well done PaperlinX.

suX expects more examples of the Sunshine Test in action soon.

Media bloodhounds on scent at PaperlinX

2012-11-13T06:21:00.001-08:00

Posting #354

Posted November 14, 2012 Twitter: @PaperlinXsuX

It's easy to tell when an interesting AGM is imminent because the financial press act like bloodhounds.

Reporters must love blood sports.

The 2012 PaperlinX AGM may be unique in Australian corporate history. The board and senior executive line-up this Thursday are all new faces since 2011.

Yep, a totally new board and chairman, new CEO (interim), new company secretary and new CFO. This must be a record for a business the size of PaperlinX.

What hasn't yet changed is the underlying reasons that forced these changes:

Recurring large losses and plummeting NTA for the ordinary PPX shareholders; and

Growing angst at shabby treatment handed out to hybrid PXUPA holders.

This new team is really the last throw of the die for PaperlinX as it couldn't withstand another bloody year like 2012, see here.

Hopefully beleaguered equity investors will hear some good news this year. The truth will normally do. What is certain is the board will be more engaging this year; because it couldn't be less engaging than its predecessor.

Meanwhile the blood sport is underway.

On Tuesday, November 13, the AFR led off with an indulgent and potentially misleading headline, here:

"Analyst buys 5.5 per cent of PaperlinX".

Wow! Just 19 days old.

Truth be known there wasn't one new piece of information in 338 words. Raymond Gonzalez was announced as a new substantial shareholder on October 24, 2012, here - 19 days previously.

What was supposedly "news" was the pro-Andrew Price spin offered by his good friend Raymond Gonzalez. For goodness sake, is this news? Anyone who buys PPX now must be a Price supporter or masochist. Duh!

What suX has known since October 24, and didn't deem worthy of reporting for the above-mentioned reasons, is that Messrs Price and Gonzalez were neighbours in one of Sydney's better inner suburbs until Price went overseas in late 2010. Their houses abutted, but one.

While not detracting from the Gonzalez investment, suX places more credence on the original Price backers pre EGM1. These are successful proprietors from the paper, print and allied trades and grew up with him; and a couple of ball-breaker style private investors with a track record for backing winners.

The real news was that the PaperlimX AGM is just two days away.

On the other hand, today Wednesday, November 14, sees another PaperlinX article in the AFR, here:

"PaperlinX hybrid holders pin hopes on AGM".

Here the theme is that investors in hybrids generally have been dudded, and PXUPA hybrid investors doubly dudded.

For non-residents, "dudded" is Aussie slang for being ripped off or conned. suX supports the theme of this article but questions the headline. Maybe this would have been more appropriate on the eve of this critical AGM:

PaperlinX hybrid holders pin hopes on

truth and transparency at AGM

Why? As explained earlier; this new team is really the last throw of the die for PaperlinX.

PaperlinX as an entity has a credibility deficit. It desperately needs credibility credits and Andrew Price is the man to deliver these operationally, BUT there is no room for any more fancy tricks like we saw from the former board and its urgers.

These days the business of PaperlinX needs to be plain vanilla profitable before it will be taken seriously.

Advice to the board: "The truth will normally do"

Cut Price at Northampton

2012-11-11T03:17:00.000-08:00

Posting #353
Posted November 11, 2012 Twitter: @PaperlinXsuX

12 days ago suX posed this question for readers in Northampton:

The original question is here. There were no responses which is a pity as suX omitted to mention the excellent prize.

Maybe no one cares whether Andrew Prices walks his talk. suX didn't name him 'Cut' Price for nothing.

Well suX cares, because cultural change must start at the top. And change must be monitored to be managed.

I'm pleased to report he stayed at the Holiday Inn Northampton, Bedford Road, NN4 7YF; then decamped to a serviced apartment which was more convenient for his needs, and cheaper.

A picture spells a thousand words and dispenses with the spin about corporate deals, rhubarb, rhubarb ...

Here's a comparison of like with like, the entrance lobbies of two hotels. First is that of The Langham, Melbourne, which was the preferred resting place and watering hole of Toby Marchant; and more recently Dave Allen and Richard Barfield.

Below is the lobby of the Holiday Inn, Northampton.

Both hotels are perfectly functional for a travelling executive. One is about one third the price of the other.

I get the message? It's very encouraging.

Based on "witch hunts" still alleged at PaperlinX UK maybe people are frightened to speak up even on trivial matters like this?

Time will tell.

"witch hunts" still alleged at PaperlinX UK.

2012-11-11T03:06:00.000-08:00

Posting #352
Posted November 11, 2012 Twitter: @PaperlinXsuX

Does this mean more Cockroaches at Northampton?

This needs to be addressed - either debunked or resolved ASAP.

Overnight suX received an anonymous email from "Freddie Flintstone" listing 14 questions he'd like me to ask Dave Allen at the AGM this Thursday, November 15.

He implored me not to mention that his detailed questions came from a member of staff, but by their content the source is obviously internal!

Here is suX's dilemma; at the two extremes:

Freddie is a hoaxer endeavouring to publicly embarrass or undermine suX at the AGM; or
Is the workplace at PaperlinX UK as toxic as Freddie suggests?

The latter raises serious concerns about morale and thus my investment. The reality probably lies between these two extremes. I've no way of knowing unless Freddie responds to my request to call him and verify his allegations.

Of course I'm sure others would be interested if witch hunts still exist within PaperlinX UK. I thought they may have ended after my revelations about Loch Lomond where Toby Marchant was singularly unsuccessful in finding the leakers - yes plural.

The reason I raise this now, before the AGM, is that suX has lingering doubts about transparency at PaperlinX UK.

Management instructed its IT department to block emails from suX, which it is perfectly entitled to do. Of course this is easily bypassed by suX however that isn't necessary as the UK readership hasn't dropped off.

But, what was management hiding; and from whom?

Update at 8:30 pm on Sunday evening, Melbourne time.

suX returned to review what he considered a near finished piece, when surprise: Freddie has emailed again. This time at 8:30 am on Sunday morning, UK time.

Looks like Freddie is genuinely a resident of the UK as hoaxers aren't usually that consistent. Most probably he's an employee of PaperlinX UK because the content is certainly that of an insider.

Alas, he doesn't want to communicate any further as he:
"cannot risk being fired in a poisonous atmosphere". Sounds either very grim or an elaborate hoax.

suX won't be asking 14 questions on behalf of Freddie at the AGM; however he will be asking one or two questions of Dave Allen which will capture the spirit of Freddie's concerns.

Be sure to attend the AGM.

There is a solution - sunshine is a great disinfectant.

You never see cockroaches and sunshine together.

The Sunshine Test is a simple yet powerful ethical guideline which can be summed up in one sentence: "If you think it would look bad if someone else knew, then don’t do it."

That "someone" could your spouse, your children, your boss, your colleagues or more broadly the press. Maybe even your entire networks of friends and family. The beauty of the test is that it implicitly takes into account society's values (as expressed by your friends/peers).

Contrary to the “nothing to hide” argument, the Sunshine Test doesn't mean that everything should be public, merely that you should be prepared for the possibility that what you do may one day be made public.

And since everything becomes public by default, this possibility is increasingly likely.

The Sunshine Test applies to everyone.

Freddie, if you want my help you'll have to identify yourself to me on a confidential basis. Many others have done so previously and no harm has come to them.

suX is totally transparent. Senior management at PaperlinX know who I am, where I live, my level of investment and my agenda. The former board didn't understand that I have the time and desire to pursue my agenda.

Michael Barker,
Independent Non-Executive Director
& Chairman

Robert Kaye SC,
Independent Non-Executive Director

Andrew Price,
Independent Non-Executive Director

Our non-executive directors know right from wrong.

None have personal or professional reasons to protect their predecessors from alleged wrongdoings.

Once this is clearly demonstrated, and accepted throughout the company; then alleged complaints like those of Freddie and other stakeholders should rapidly disappear or be resolved once and forever.

At times of dramatic change, as has recently occurred at PaperlinX, the incoming board is morally obliged to rid the organisation of its intrusion of cockroaches. For an explanation about Cockroach Theory and corporations, see here.

Wholesale changes occur for a reason. At PaperlinX it needs to be a total change of culture led by the new board.

Reversal of the revoked 2012 bonuses was an example of this. It occurred as soon as practical after the board change.

suX expects more examples of the Sunshine Test in action soon.

A Remembrance Day special edition.

2012-11-10T05:22:00.000-08:00

Posting #351
Posted November 11, 2012 Twitter: @PaperlinXsuX

Remember 12 months ago?

When the term "PaperlinX-suX" was considered either repugnant or humorous; whereas today it’s widely accepted as a metaphor.

By late 2011, Toby Marchant’s leadership was openly dismissed by his peers in the UK and being questioned by a few sophisticated investors. But in spite of this it was secure at board level and thus with the majority of Australian investors, professional and retail.

Remember when PaperlinX had 6,200 employees worldwide?

When Milton Keynes was the Global Centre! Of what and why everyone now asks?

Before the days when “Loch Lomond” meant more than code for corporate excess?

When everything that was stupid and silly within PaperlinX was considered normal at Northampton, Milton Keynes and Scoresby?

When a raft of now former senior executives had high paying titles with little accountability to the business' owners for their performance?

When the “three brand” policy and “winning the right way” were still being trumpeted by PaperlinX but ridiculed by everyone else?

When Toby Marchant was still rabbiting on about

“differentiated value propositions” until he was sacked?

When travelling executives enjoyed the lap of luxury at 5 star hotels; and the board was known to fly by private jet?

Ah! Those were the days.

Unfortunately, the grand days of paper merchanting supporting such largesse had passed many years earlier. Clearly, no one had told the board; or Toby.

On November 11, 2011, Hastie (HST) was still in business, trading at $1.00 with a market cap of $137 million. Gunns (GNS) was trading at $0.24 with a market cap of $204 million, and its hybrid note (GNSPA) was trading at $60.00 with a market cap of $72 million.

Poof! That $413 million disappeared even faster than our former board's credibility, some achievement; and in 12 short months both Hastie and Gunns had collapsed.

Harry Boon had just ascended to the chairmanship of PaperlinX on September 1, 2011, giving him a lucrative emolument of six directorship equivalents. This was 50% more than the four recommended by the Australian Council of Super Investors (ACSI), and despite its numerous earlier warnings of his breaching of guidelines for directors’ workload and responsibility.

On changeover, the incoming and retiring chairs both made traditional reassuring or self-congratulatory statements, here, when in reality successive boards had wasted a decade; the business was on the edge of a financial precipice and faced imminent equity holders’ hostility.

PXUPA is now a third of the price it was 12 months ago, but don’t worry. Harry Boon, recently deposed chairman, assured us that:

"PaperlinX is in fact in far better shape than when I took over as chairman 12 months ago." Here.

Go figure!

The first casualty of warfare is truth; and please, let history be written by the victors. For the record, Harry Boon now holds three directorship equivalents, down from the six he held 12 months ago, and none of the resignations were voluntary.

Remember when PaperlinX-SuX, Platinum Equity, PXUPA Investor Group Supporters, Andrew Price and Coastal Investment Management were unknown by the average PaperlinX punter, and to each other?

The opening salvo "PaperlinX transparency absent" was fired across the bows of the good ship PPX on November 10, 2011. PaperlinX-suX was launched soon after; ironically on November 15 which is the date of PaperlinX's 2012 AGM. The first posting had a prescient title: "All talk but no action" and comprised a mere 73 words.

suX was frequently disparaged and even labelled defamatory; but no one ever pressed charges for defamation and no one has ever challenged the facts. Most of the material is simply grossly embarrassing for those who played their part in ripping off hybrid holders for $250 million.

Bushrangers are still alive and well in corporate Australia despite Ned Kelly being hanged on November 11, 1880; another remembrance day.

Remember when Toby Marchant said he “loved the company”?

We now know why.

Remember why Mike McConnell was subject to 12 months of self-imposed ridicule?

November 11, 2011 was when we were all one year younger and totally naïve about PaperlinX. Now the truth is finally emerging after nearly 12 months of bloody warfare. suX suspects there is more carnage ahead.

95 years on, we still celebrate the Armistice of 1918. It’s also called Veterans or Remembrance Day but always marks the end of World War I. It was called the Great War and "the war to end all wars" until the start of World War II in 1939.

The point to ponder on this day of multiple remembrances, and there are many when considered; is whether the ascendancy of Andrew Price and a new board marks the conclusion of the Great War at PaperlinX. Or, is it merely its own version of the Treaty of Versailles; which is oft claimed to have sowed the seeds for WWII.

Churchill said:

“Those who fail to learn from history are doomed to repeat it.”

Sun Tzu, if he existed, probably said something similar.

On November 15, 2012, will our chairman deliver a workable "Treaty of Scoresby" ? Will the new board embrace transparency which has been absent for so long?

On this rememberance day, lest we forget.

Paper industry finally confronts reality: Good News!

2012-11-01T19:57:00.003-07:00

Posting #350
Posted November 2, 2012 Twitter: @PaperlinXsuX

IF anyone has residual doubts about the dire straits of the print/paper business, please read the six recent articles below.

#5 may be highly relevant to PaperlinX as its major funding is from ING Europe. What isn't clear is whether ING is withdrawing from fixed asset funding of UK SMEs generally, bad enough alone as this is a grim assessment of the UK economy, or whether ING is withdrawing from all classes of funding to the print and related sectors.

No doubt this will be addressed at the AGM on Nov 15. It may explain why Andrew Price is in the UK at present. Time will tell.

#1 14Sep2012: Sequana plans to close three plants in Denmark, UK and Argentina

#2 26Oct2012: Sequana's Q3 results along with other press releases incl EUR 150M cap raising in June 2012

#3 26Oct2012: Paper industry continues to suffer as demand drops

#4 29Oct2012: Heidelberg to sell off presses and downscale Melbourne showroom

#5 31Oct2012: UK SMEs rocked as ING Lease drops asset finance services

#6 01Nov2012: Eurozone unemployment hits record high of 11.6%

The level of unemployment in the euro zone has risen to its highest level yet as the region's economy continues to shrink. The number of people out of work in the eurozone has risen to 18.49 million, or 11.6 per cent.

That compares to 10.3 per cent this time in 2011. Yuk!

Where is the good news?

(1) Tough people last whereas tough times don't. The survivors are going to do very well at some time in the future. This is good news provided PPX doesn't go broke.

(2) When groups like peak bodies decide to go public and admit they have a problem, the problem is mostly resolved by market forces. The smarties are already running ahead of the curve.

It's the human condition; people fall over themselves to buy shares at the top of bull markets and sell at the bottom of bear markets.

(3) Proclamations like "sunset industry" are a dead give-away, see 6th last paragraph.

Note: I'm not calling this as the bottom of the print/paper cycle. There will be a lot more pain but we are closer to the end than the beginning. The market "needs" a few more spectacular bankruptcies which will convince everyone that print/paper has no future. That is the bottom. The collapse of PaperlinX could be that event. Hope not.

A dose of realism: None of the above press announcements are startling "new" news, but merely conformation of what has been in train for five years. The problem for PaperlinX is that it failed to see, let alone adapt to, major changes in its biggest market.

I realise Milton Keynes is now old hat, but it was the "pinnacle", if you'll pardon the pun, of management's disassociation with reality. Those with 30 years experience really had 5 years experience that was 25 years out of date.

That's why it will take a radical change with totally new faces, like Richard Barfield and now Andrew Price, to address the current reality. This view clearly leaves no place for Dave Allen in PPX's future, or any other Marchant disciple for that matter.

Change means change, not tweaking within your comfort zone.

There is always good news if you want to look. Warning: what follows will displease many.

Those outside the UK may be unaware of the recent BPIF and NAPM joint conference held in London on September 27 to bring together members of the print and paper industries. There's a novel idea; however it was heralded as a "first".

Unfolding the Future - The Changing Market for Print and Paper brought together printers, print buyers and paper suppliers to discuss the direction the industry will take over the next 20 years.

WOW. From suX's understanding of the major players, see graph below, just the next 20 months are front of mind for those serious about seeing in the 21st month.

The conference took place at The Tower Hotel, in East London. The fee for BPIF/NAPM/BOSS members was £255 for the forum or £315 for the forum plus networking dinner on 26 September; meaning that out of town attendees also stayed the night in London. In other words, a junket.

A nice little WOTAM for wankers. It gets worse, much worse.

Surprise! Next day, September 28, we read BPIF and NAPM first union a success! Sounds like a breeding program for endangered species. What is the gestation period? Please be sure to read the article in PrintWeek. Here are some memorable extracts with cynical commentary:

(1) "The conference brought out some provocative thoughts such as Philippa Charlton’s (or here) direct statement:

'The traditional merchant model is broken.'

She said that those in the industry had not been 'honest with ourselves' about how steep the decline in paper demand had been over the past few years."

Philippa Charlton
Marketing Director,
PPX UK & Ireland

What a load of tosh, and that's being polite to a lady.

The problem is that its impossible to conceal incompetence when demand is falling . Or, as Warren Buffet once famously said:

“You never know who's swimming naked until the tide goes out.”

The "merchant model" has served commerce well for hundreds of years. It was the driving force behind the British Empire. It's unlikely that an experienced communications and marketing director would be misquoted, so perhaps what she was wanting to say something like this:

"The paper merchanting model that I

joined in 2001 is broken".

Wrong again, because the merchant model is universal for traded goods and inherently adapts to the prevailing conditions of its market.

The point I'm labouring is that the Merchant Model is fine and will be so forever. PaperlinX failed to adhere to the basics of the Merchant Model; know your market intimately and always keep costs very low because the producers and end users will never permit super profits, just a margin for being there.

PPX has allowed itself to believe its a glamorous business whereas its simply a wholesaler of a basic commodity. Its business model is really no different to that of your local steel merchant or timber merchant. It gets worse.

The role of wholesalers is very simple: intermediation between producers and end users. At a higher level it's about foreseeing and exploiting supply/demand imbalances. Does anyone remember when PaperlinX had a Chief Operating Officer, Merchanting and Paper Trading?

Peter Waterworth
COO
Merchanting and Paper Trading.

Peter Waterworth, former MD of Spicers Paper, was the last credible paper merchant on the board of PPX. He resigned in Nov 2004 at age 59. What foresight.

For the privilege of earning a modest wholesaler's margin, merchants manage the supply chain between producers and end users, and provide specific product services if required.

That's the job. Everything else is nice but not necessary.

It isn't unique to the paper business however some at Northampton would have outsiders believe that paper is special. It isn't.

As proof of this heresy I note that David Hunter, recently appointed MD at Antalis McNaughton in Feb 2012 hails from the B2B wholesale distribution sector, building materials. Antalis McNaughton's website says: "David brings with him a solid management experience from many years in B-to-B wholesale distribution at Wolseley, B&Q and Jewson."

He brings "solid management experience" and "B-to-B wholesale distribution". That's the key, not the underlying product. Paper is a commodity like building products.

It's suX's belief that the building industries make paper wholesaling look like a walk in the park.

Isn't this a conflict of views? No. Antalis McNaughton is steeped in paper/print expertise. Better minds determined it needed Hunter's management skills, not paper knowledge. Besides, HO is nearby in Paris. Whereas PaperlinX has had a global senior executive slop bucket for nearly a decade. Regular readers will understand.

(2) "Northend Creative Print Solutions managing director Nigel Stubley, who also gave a speech at the conference, said: 'We need more transparency in paper pricing so that printers can decide what level of service they are willing to pay for.' "

Agree, its called unbundling. To be continued soon.

Here is the sorry state of our market environment.

Australia, the lucky country and now ranked the 12th largest economy in the world, still sees its stockmarket languishing down 30% after the 2007 peak.

Suppliers to the print trade are stuffed - until they find different ways to do business.

Message: RISK ON.

Good News 2 to follow soon in the same hopeful albeit cynical style.

PXUPA - Register Now to Protect Your Investment

2012-11-01T10:51:00.000-07:00

Posting #350
Posted November 2, 2012 Twitter: @PaperlinXsuX

PaperlinX SPS Hybrids (PXUPA) were issued at $100 in 2007. They are now trading at $9 and have failed to pay the last three distributions.

Read how there is still hope, if investors are serious about recovering their investment.

PaperlinX PIGS is a group of volunteer fellow investors in PXUPA who are working to protect the interests of all holders, many of whom invested on reliance in an ambiguous Product Disclosure Statement.

We are the only group actively working to protect the interests of PXUPA holders.

Our aim is simple: to protect the entitlements of all PXUPA holders, and attain maximum value for their investment. If we do not attain enough support, there is a significant risk your investment will be worth nothing. We will keep you informed of developments and act to protect your investment – all we require is for you to register your holding here.

PaperlinX PIGS strongly believes there is substantial value in the PXUPA hybrids well in excess of their current $9 market price, but we will only be able to realise this value with collective shareholder support. This means we need your support.

PaperlinX’s financial position is continuing to deteriorate and time is of the essence. We must act now to avoid sharing the fate of Gunns hybrid holders - who lost 100% of their investment. Please register without delay.

More information on PaperlinX PIGS, its Steering Committee, the work already done since January 2012 and contact details can be found here.

Stop Press: On November 22, 2012 the inaugural PXUPA Investor Advisory Committee (IAC) annual meeting will be held in Sydney with a video-link to Melbourne. This is a joint initiative of the Responsible Entity (The Trust Company) and PIGS (PXUPA Investor Group Supporters) and the first of its kind to be hosted.

Again, full details are available on the PIGS website at here.

memories + thank you + to my critics + carpe diem

2012-10-31T06:21:00.000-07:00

Posting #349
Posted October 31, 2012 Twitter: @PaperlinXsuX

suX is winding down for the present, certainly not retiring but will remain ever vigilant. This post is a thank you and a few long overdue explanations and responses. No apologies, merely explanations.

Now PPX has a change of management suX intends to focus his energies on this blog's raison d'être. That is to restore value to the hybrid securities PXUPA.

Hopefully the new board will accept its obligation of a duty of care to this important class of equity holder. We shall soon see.

The new board deserves a honeymoon period. It is presently a small target with no apparent skeletons in members' respective closets. The new CEO deserves a honeymoon too. After all Tom Park had 6.5 years and Toby Marchant 21 months; although he should have been fired the day he first uttered "Milton Keynes".

suX should give a new permanent CEO at least six months however if Dave Allen gets the gig then continuity will be assumed. Sorry Dave, but if you elect to screw me around then pay the price. Regardless, the punters will advise how he/she is progressing well before the FY2013 accounts.

A blogger needs content. Poor old Harry and Toby were a blogger's gift that kept giving. No content means no blogging.

To critics of my style. Fortunately we live in democracies. I'm entitled to publish what I like and you are free to read what you choose. No one every criticised the accuracy of content much of which was ground breaking and drove certain PPX senior people stark crazy.

It had an impact. Some say the style was abrasive. Good, because that was the intention. suX is tabloid without a page 3 girl, not broadsheet.

What I do know is that there were many regular loyal readers and contributors and we got the job done.

To my critics within PPX. There was a common misconception, particularly in the UK, that suX was praising certain independent UK merchants to the detriment of PaperlinX. I was accused of "giving air" to the opposition.

This is nonsense, but understandable from an individual's point of view. Others with flash titles did that for you years ago. It started in 2006 to be precise. Now think about who was ascending to power at PPX then.

To be more precise, the PPX acquisition of Buhrmann settled in November 2003 and EBB was expanding North within three years.

Why? Because the smarties could see the flaws in PPX and its management.

By August 2012, EBB had completed its expansion North arriving at Glasgow, see EBB about to open in Hillington, Scotland.

Concurrently Premier Paper was doing something similar, see Premier fills another UK leadership vacuum. It suX. For years Premier Paper only had a sales operation in Scotland then in early 2009, so soon after the acquisition of Premier by Beswick in March 2008, Premier opened a warehouse in Glasgow.

Clearly Tim Elliott and Graham Griffiths are better operators than the lunatics that ran PaperlinX into the ground over nearly nine years and blew away nearly $2 billion in market cap in the process. I say "lunatics" in deference to a great thinker.

“Lunacy is to keep doing what you’ve been doing

and

expect different results.” Albert Einstein

Most people, including successive "blue chip" boards of PPX, couldn't see reality for the clouds of bulldust billowing out of Northampton and then Milton Keynes. Premier and EBB didn't pay one dollar of goodwill while pinching former PPX strongholds. Don't blame suX for that.

suX was merely helping to remove incompetent management hoping that when PPX competes on a level playing field it'll make profits so as to pay distributions on its hybrid securities PXUPA. There could never be another motive.

In doing so I acknowledged industry veterans who "stuck to their knitting" and ran their businesses with prudence not ego. It's worth noting that Messrs Elliott and Griffiths are both accountants by profession - bean counters, cost managers ... hello, anyone paying attention out there.

It may have caused some regrettable short term angst but in the absence of a better alternative it's worked. If you disagree, kindly advise me of a polite way to get rid of an entrenched incompetent senior management structure rife with nepotism. Saying "please" doesn't work.

There were many armchair critics yet none were moved to act; which says more about them than me.

Thank you whistle-blowers. They came in all shapes and sizes. They hailed from UK, Europe including CEE, Canada, North America, NZ and OZ.

After a while suX developed trustworthy sources and often spoke at length with them on the telephone.

The main PPX defence was denial or lies. Several lies were published. Eventually the sordid truth came out. Unfortunately a lot of material could never be published as it was just too incriminating. Problematic lifestyle habits and extra marital stuff was outside my brief.

The most rewarding breaks came when suX was able to correlate seemingly uncorrelated information provided by two or more sources. Eureka!

This process confirmed the Loch Lomond scandal after this priceless entry was found in the East Kilbride News (Glasgow).

East Kilbride News - April 6, 2011.
GOTCHA!

Who in Melbourne reads the East Kilbride News? Me. suX left no stone unturned in pursuing the wrongdoings at PaperlinX.

Thank you whistle-blowers.

The best leak ever? The person who sent me the entire UK & Ireland Contacts Directory maintained by Felicity Addis, HR Data Administrator - PPX UK.

Look familiar?

What a resource for a sleuth checking out stories. It even had 654 contacts for Delivery Co including John Ball's DDI 01604 673478, mobile 07901 514728 and email of john.ball@deliveryco.co.uk. Now do you believe me!

It wasn't the most sensational leak, was unsolicited and could never be published; but it was ever so thoughtful of the whistle-blower and helpful to suX. I never abused it.

Probably the most sensational leaks were Toby Marchant's "Dear PLG" letters; February 3, 2012 and March 9, 2012
which the awesome company secretary couldn't verify as being authentic. Gee, somebody must have really hated PPX management to leak those from within the PaperlinX Leadership Group (PLG).

These two leaks and their denial by Orrsome gave suX the confidence to bat on.

To those very stupid persons in senior management who prated about my sources - you were wrong and are no longer in office. Mission accomplished.

My most enjoyable posting was undoubtedly Scotland the Brave complete with music and lyrics adapted for PaperlinX.

Hark when profit is falling
Hear, hear the clients are calling,
Loudly and proudly calling,
Down thro' the glen.
There where the board are sleeping,
Now feel the will a-weeping,
Oh for the spirits of the old paper men.

I love the Scots, used to learn the pipes as a schoolboy and would like to see the recently painted PPX facilities in Glasgow made ready for the directors' tour to Loch Lomond (via Glasgow) in late 2010. Toby, you have a lot to answer for.

To those who remain, carpe diem. I Received this email from an respected person in the UK paper industry and now belatedly publish it with his/her consent:

“30 Sep 2012

Hi Graham, heard last week that John Turner, Divisional Director - Graphic & Carton Board at PaperlinX UK had just resigned to join independent board specialist Warren Board.

John is a well respected and experienced person in the industry and is another high quality loss for PaperlinX. When will they steady the ship?

People like John and recently departed Paul French create a double problem; they no longer bring in business but actively, with their new companies, take it away from PaperlinX!”

The writer's concerns are well intentioned and respected. My view is more sanguine.

No one is indispensable; "what is, is"; and regardless of their position all employees fall into three classes at times like this:

Those who desire to leave, and resign. We wish them well;

Those who desire to leave, and cannot. They are a serious problem; and

Those who wish to stay. Management then needs to decide if they deserve a seat on the bus, see Is this your bus?

Presumably Messrs French and Turner and their new employers know what they are doing. One cannot stop anyone attempting to improve their lot in life by legitimate means. Good luck to all four of them. Just as good government requires a strong opposition as an alternative government, good companies grow through strong competition.

The challenge has been to stop PPX acting irrationally and not to influence personal freedom.

suX poses this question for serious consideration. Why would talented engaged persons elect to leave PaperlinX now? Genuine new management devoid of nepotism is the dawn of opportunity for good people at PPX. It's probably the best "real" opportunity they've had in years. It must also scare the living daylights out of many others.

PaperlinX companies will still exist in some form in the future, either within PPX as profitable undertakings or sold to others who can better manage them. Either way their owners will still need good people.

The biggest problem for Andrew Price is non-performers who have no where to go and nothing to contribute by staying; and I get the impression there are still plenty of those still employed in key positions within PPX UK and Europe. This problem dwarfs any concerns about the future careers of Messrs Turner and French.

I expect the ship will lurch and skew, then steady but cannot tell you how or when. One day we'll wake up and see that PPX looks and walks differently. Everyone will then look back and think: "how easy was that!"

There is an interesting tweeter named Paper Man at @papernprint who describes himself as:

"Seller of papers to printers...how hard can that be!!"

He also quotes Peter Drucker: "Management is doing things right, leadership is doing the right things." I hope he works at PPX UK.

Finally, with respect to my correspondent's closing comment; he/she is making assumptions. They are "glass half-empty" styled assumptions made out of genuine concern. suX could easily mount "glass half-full" styled counter arguments.

But that's a waste of time, because "what is, is".

suX was resting not retired. Is this your bus?

2012-10-30T00:35:00.002-07:00

Posting #348
Posted October 30, 2012 Twitter: @PaperlinXsuX

Who's on the bus?
Answer below.

There's not a lot happening corporately at PaperlinX as we await the AGM in Melbourne on Thursday, November 15.

Key current issues are:

Plans of the new board;
Appointment of a permanent CEO; and
What will be the permanent role of Andrew Price?

One would have thought these matters are pretty well settled by now, so "watch what people do not what they say" is the best plan for outsiders. Meanwhile ...

Andrew Price hops into Northampton to the surprise of many. Must have been to celebrate his birthday on October 28. For those who follow astrology he was born in 1963, the year of the rabbit. I suppose he'll be hopping into the job at Northampton. Oh dear, but more appropriate than the first first rabbit cartoon that came to mind.

suX offers a special mention to the first person who advises where 'Cut' Price is staying. Go on, he'll be pleased for everyone to know. Hopefully it's 3 star.

Marcus Gillioen, Exec VP Europe 1 has left PaperlinX. He was responsible for mainland Europe ex Spain and was based in Amsterdam. Without having to worry about Spain, France, Italy and now CEE; nor profits it seems, this gig looked too good to last. Surely his departure was expected.

That leaves one survivor from management of 2008 - 11 inclusive.

The winner is Dave Allen.

Way back on June 30, 2012 (four months ago) when he was then Exec VP Europe 2 responsible for UK, Ireland, Spain, Sth Africa and then Canada with the departure of Chris Creighton; suX said of Dave Allen: "This is a demanding and thankless role." Nothing since then, including Dave's bloopers, has changed suX's assessment.

Dave Allen will be remembered by suX as the man who tried to curtail free speech in the 21st Century by blocking the PPX network to this humble site. Problem is that it hasn't diminished the level of page views from the UK. Another forecast gone awry. ShuX.

Embracing change.

The senior management of 2008 are now all gone, see here;

The senior management of 2009 are now all gone, see here;

The senior management of 2010 are now all gone, see here; and

The senior management of 2011 are now all gone bar Dave Allen, see here. Note that Allen and Gillioen didn't warrant a mention in 2010.

Add to that list recent retirements of Messrs French and Lane-Ley and there's been a decent rout of senior managers. Most were probably years overdue.

If this degree of change concerns you, be sure to read this:

"Who" before "What"

You are a bus driver. The bus, your company, is at a standstill, and it’s your job to get it going. You have to decide where you're going, how you're going to get there, and who's going with you.
Most people assume that great bus drivers (read: business leaders) immediately start the journey by announcing to the people on the bus where they're going - by setting a new direction or by articulating a fresh corporate vision. [sound familiar?]

In fact, leaders of companies that go from good to great start not with “where” but with “who.” They start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats.

Is this your bus?

And they stick with that discipline - first the people, then the direction - no matter how dire the circumstances.

That was a brief extract from Good to Great by Jim Collins. If you are serious about any business or business unit turnaround then this concept is for you. More here. I'm not sure whether Andrew Price reads Jim Collins. Doesn't matter as the idea makes sense and has been described in many other ways previously.

The fault with PaperlinX all along has been management. I accept the print/paper industry faces challenges, however the major problem was never the litany of excuses trotted out by successive boards and CEOs. It's had the problem that's common to every failed business, big or small - management.

Believe it or not, paper wholesaling is about the easiest business in the world. PPX has consistently stuffed it up.

Yep, it's really that simple.

Wanna hear some good news re FY2012 bonuses?

2012-10-18T09:07:00.002-07:00

Posting #347
Posted October 19, 2012 Twitter: @PaperlinXsuX
FY2012 Bonuses reinstated. A little birdie tells suX that the previous Board's decision has been overturned by the new Board.

The money has been paid.

This makes Mike McConnell a double loser, again, as he was (is still?) Chairman of the Remuneration & HR Committee (appointed April 10, 2012). That's another story for another time as this is a good news posting.

Recall our leaking of this abomination on bonuses here and Dave Allen's leaked internal advice here .

On this occasion suX has no leaked documents to reveal as satisfied employees never leak (memo Harry, Toby, Dave et al) however the "mail" is good.

Remember the old saying: Bad news circumnavigates the globe before good news has time to cross the street. At this rate suX will run out of material as good news is bad copy.

suX thought everyone, including the press and opposition merchants, ought to hear some good news about PaperlinX.

More good news. It is permissible to have two pieces on one day.

Earlier this week Gaby Berger, convenor of the steering committee of PXUPA Investor Group Supporters (PIGS) sent an email to Andrew Price about a matter between PIGS and the new Board. He received a response within hours referring him to the appropriate person.

Wow! In the past it was impossible to even communicate with a director. Responses from Scoresby took several follow ups and usually took a long winded way to say "piss off". On one occasion suX received a delightfully written letter which took 147 words to say "No". That's awesome, if you get my drift.

I'm not suggesting that the whole world should deal directly with Andrew Price, but at least on this occasion Gaby Berger now knows who to deal with.

Perhaps this concept of dealing with stakeholders could catch on. Suggest Northampton has a meeting to form a committee to appoint some consultants to review it.

It's early days, but these are promising signs.