Earlier this month it was revealed that the company had fallen $50m short in the institutional investment component of its offer, when it raised only $150m instead of the projected $200m.
That shortfall prompted PaperlinX to revise its target for the retail investment component of the offer from $100m to $77m, but this week the company revealed in a statement to the Australian Stock Exchange that it had managed to raise just $35m. This represents an overall shortfall of $115m on its original target of $300m when it announced the move at the start of October.
With net proceeds from the offer set to be used to cover the company’s debts, this latest shortfall is more bad news for a company which last week declared it expected weak business conditions to continue over the coming financial year.
At its AGM in Melbourne, the company also announced that it was continuing to look for a buyer for its Australian Paper business, with no deals being struck despite talks being conducted with a number of interested parties.
Managing director Tom Park, however, remained upbeat about the company’s prospects.
“Recent external factors have turned favourable for PaperlinX, including the weakness of the Australian dollar which benefits Australian Paper and the translation of overseas earnings, as well as recent announcements of major consolidation in the European paper manufacturing sector with announced capacity reductions in coated woodfree paper manufacturing supporting future pricing in that market in addition to current price rises,” Park said.
“We appreciate the support from our shareholders during this volatile period in international markets. PaperlinX has already secured funding in relation to the $150 million May 2009 debt repayment and these additional funds will further strengthen the Group’s financial platform and reduce debt. This also provides flexibility to ensure the optimal outcome is achieved from the Australian Paper review.”
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