Price and his group have already invited Boon to resign, a request he has resisted, so the group has lodged a request for an EGM. Price says, “Mr Boon declined our invitation so we must now go through the process of requisitioning the company to call an Extraordinary General Meeting so that all shareholders can have their say. It is disappointing that the business has to incur these additional costs”. The EGM has to take place within two months of the notice being given, so by April 3 at latest.
Price is looking to take an active role at PaperlinX. He has an extensive paper merchanting background, working at Edwards Dunlop then Spicers for 16 years, before leaving 12 years ago to set up Stream Solutions, which became the biggest print buyer in the country. He left Stream, which he sold to Toll Holdings, 12 months ago.
Price says, “I see enormous opportunities for the PaperlinX business, if managed correctly, and I am prepared to take an active role in returning the company to profitability.”
The move, backed a by a group of shareholders with a 5.07 per cent stake in PaperlinX, would almost certainly mean a major shakedown of the PaperlinX business, coming as it does at a time when US private equity business is looking to bid for the company, with large parts of it likely to be sold off.
PaperlinX has recorded one the worst share price runs of any company on the ASX over the past decade, its price has plummeted by 98.5 per cent from a high of $5.37 in Sept 2003 to the current 0.7c level. The company is expected to announce a loss of a $1m a week for the first half of this year on Feb 22.
“It is quite rare in Australia to have an EGM called under these circumstances although given the dismal performance of PaperlinX in recent years, it’s not unexpected.”
Australian paper merchanting has had a torrid time over the past three years, with the GFC slashing the domestic market size by more than 20 per cent in volume. The biggest local rival for PaperlinX, CPI, was sold to a Kiwi private equity company last year. PaperlinX and CPI control about 80 per cent of the local market, KW Doggett has about ten per cent, with the rest split between a host of smaller merchants.
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