Paperlinx falls in Austria

The dominoes keep falling across the stricken European operations of Paperlinx as shockwaves from the UK and Benelux failures now knock over the Austrian business.

The company’s shares however have continued their upward surge, now trading at 3.9c on the ASX as investors bet on more stable conditions without the European millstone tied around its neck. This is a 130 per cent rise in value since the shares were placed in a trading halt pre-Easter.

Local directors in Austria called in administrators yesterday to take over the business, with the collapsed blamed on ‘liquidity issues the business has faced’ as the situation deteriorates rapidly.

[Related: The ups and downs of Paperlinx]

The merchant says ‘the tightening and/or withdrawal of credit terms from suppliers and lenders in recent weeks after the Paperlinx UK and Benelux businesses were placed into administration’ caused the liquidity problems.

“This appointment in Austria highlights the interconnectedness of the Paperlinx European businesses.”

Paperlinx had attempted to sell the business before the credit issues caught up with it, and the race is now on to offload operations in Czech Republic, Germany, Ireland, Poland, Scandinavia and Spain.

The Austrian business, PaperNet, had sales of about €50m and about 70 staff who will almost certainly lose their jobs.

Paperlinx HQ continues to maintain that Spicers is financially separated from the European disaster, but local customers are likely to get nervous if the situation drags on much longer and more subsidiaries go down.

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