The restructure is expected to create one-off pre-tax costs of $14m in its 2011 results, in order to deliver annual pre-tax savings of $17m.
A jump in the company’s share price in the days immediately before the announcement produced a “please explain” from the ASX. Paperlinx responded that it was “not aware of any information… [that] could be an explanation of recent trading in securities of the company”.
The company’s share price rose to 17.5c on 1 July, up from a record low of 10.5c on 27 June. The shares have since fallen back to 15c.
It was the biggest jump since shares rose from 40.5c to 50c in late January in advance of the merchant’s interim results.
Paperlinx’s Australian office did not comment when contacted by ProPrint. However, ProPrint‘s UK sister title, PrintWeek, reported that the merchant has entered consultation with staff as it merges back office functions in the UK.
According to the ASX announcement, Paperlinx will fund the restructure from its own cash reserves and working capital facilities, adding that the company will comply with its financing covenants.
It also reconfirmed its forecast from May that it will see a full-year loss in its results, due to be announced on 25 August, though this will be “nearer that $30m loss advised in that guidance”.
It is the second major restructure this year, following a move to cut $15m announced back in February. Just last month, Paperlinx ANZA cut executive general manager Larry Jackson.
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