Displaying items by tag: PaperlinX

The Board of PaperlinX is pleased to announce the following appointments which have been made after careful consideration of the needs of the business, the Company’s legacy management issues and the challenging business environment faced by our business, particularly in Europe.

Mr Allen’s employment arrangements do not contain a fixed term and can be terminated by PaperlinX on 12 months’ notice or payment in lieu of notice. His employment may be terminated immediately and without notice on the grounds of misconduct, dishonesty or breach of duty.

Mr Allen can terminate his employment on 6 months’ notice.

Relevant details of these remuneration arrangements will be in the 2013 Remuneration Report

2.  Appointment of Chief Financial Officer

Mr Joost Smallenbroek has been promoted to the position of Chief

Financial Officer for the PaperlinX Group effective today.

Mr Smallenbroek, a resident of The Netherlands, joined PaperlinX in 2004 and is currently Corporate Finance Director for PaperlinX Europe, leading Treasury, Tax and M&A functions in that area. His earlier background was as an international tax adviser with Coopers and Lybrand (now PwC) and Ernst and Young.

Based in Continental Europe, the new CFO will be well positioned to focus

on the Company’s under-performing businesses in that region.

“Mr Smallenbroek has a thorough understanding of the issues facing our business and has exhibited the qualities, which this Board believes, are necessary to return our business to profitability,” said the Chairman.

Mr Andrew Price will continue in his role as Executive Director to assist the Executive team in restructuring for the foreseeable future.

In summary, Mr Barker, said “These appointments, along with many other restructuring initiatives, place PaperlinX in the best possible position to deal with a difficult market and legacy management issues. In particular we are pleased to be promoting experienced Executives from within the business. The Board is delighted with the new structure and quality of the Executive team now in place and believes we have an excellent opportunity to restore value in this business. It was apparent to the new Board, almost immediately that in order to turn the Company around there had to be a major cultural shift within. A key element of this shift is the complete redesign of the remuneration scheme. Our remuneration system now ensures that shareholder returns are the priority.”

PaperlinX advises that whilst the Company`s financial results for the 2011 financial year are still to be determined, the Company expects that its full year statutory loss after tax will be within previous guidance, but nearer the A$30M loss advised in that guidance. This includes a substantial non cash valuation loss for a foreign currency option but excludes any possible impairment, if necessary.

The Board has approved management undertaking a restructuring process across its global operations which is expected to result in an additional charge of approximately A$14M pre tax (A$10M post tax), which will be included in the 2011 financial result. This additional charge is not included in the guidance referred to above. The intended restructuring is expected to produce annual cost savings of approximately A$17M pre tax in a full year with benefits of approximately A$14M pre tax in the 2012 financial year.

The restructuring will be funded from existing cash reserves and working capital facilities. The Company's current forecasts indicate that relevant financing covenants will continue to be complied with.

The Company will announce its full year results on 25 August 2011.

The Board of PaperlinX Limited advises that Mr Tony Clarke has joined the Board as an independent non-executive Director.

Mr Clarke has a strong financial background and has held a number of senior finance positions including Chief Financial Officer of Amcor Europe and Finance Director of Pacifica Group Limited. He was recently involved with Centro Properties Ltd in the financial restructuring of that Group.

“We are delighted to welcome Tony to the Board. His experience of working in the European paper and packaging industry will be particularly valuable to PaperlinX” said David Meiklejohn, Chairman of PaperlinX Limited.

PaperlinX advises that trading and general economic conditions in our key European, United Kingdom and North American markets remain weak. Volumes are significantly below last year and below our expectations in Europe and the United Kingdom. Despite these market conditions the Company is maintaining market share in Europe, the United Kingdom and North America and has implemented some price increases in these markets.

The already depressed Australian print market is being further impacted by the high Australian dollar and this coupled with the Company’s strategy of not pursuing riskier, lower margin business is impacting results in Australia.

Although the Company is continuing with its business restructuring program to remove costs and better align businesses to the new market conditions, there is an unavoidable time lag between implementation and benefits flowing through to financial performance.

Accordingly, with market conditions and other key factors remaining relatively uncertain and difficult to predict, PaperlinX expects to report a full year statutory loss after tax for the 2011 financial year in the range of $23M to $30M, (inclusive of an estimated non cash valuation loss for a foreign currency option of some $A14M after tax). This compares to a statutory loss after tax of $225M for 2010. Underlying earnings after tax for the 2011 financial year are expected to be a loss after tax in the range of $7M to $14M, after adjusting for the impact of the foreign currency option and discontinued operations. This compares to an underlying loss after tax of $28M for 2010. Possible implications for impairment valuations at 30 June 2011 will be considered.

PaperlinX also advises that the maturity date of the Company’s largest borrowing facility (in Europe) has been extended from May 2012 to September 2013.

PaperlinX today announced a further streamlining of its management and head office structure with the closure of its European head office in Amsterdam. Together with recent staff reductions at the Corporate Head Office in Melbourne, the closure of the Amsterdam office will result in ongoing cost savings of approximately A$15 million per annum and will be cost neutral in the current financial year.

The new arrangements will involve the 2 European regions reporting directly to the CEO and CFO, who will be based at the Operational Head Office in the UK. There are no plans to change PaperlinX's domicile out of Australia.

PaperlinX CEO, Toby Marchant said, "This move is consistent with our stated objective of creating a simpler and more cost efficient head office environment with fewer centres and fewer layers. The relocation of the CEO and CFO from Australia to the UK brings our senior management closer to the geographic centre of our operations, given that nearly 70% of our business is in Europe and 90% is in the Northern hemisphere."

Mark Hooper has stepped down as chief financial officer (CFO) at PaperlinX and will also retire as a Director of the company, both effective by September 16. He will assume the position of managing director and chief executive officer of Sigma Pharmaceuticals.

Commenting on the resignation, Tom Park, managing director of PaperlinX says, “Mark has made a strong contribution to PaperlinX as both CFO and as a director of the company.

“It is with regret that we see him leave, but he leaves us with strengthened management across our finance community, and improved processes to help with the future growth of PaperlinX. This platform will help with a smooth transition. I wish Mark well for the future.”

PaperlinX outlines that Hooper’s replacement is yet to be determined.

PaperlinX Ltd is today repaying in full its historic lending facilities, made up of syndicated bank debt and US Private Placement notes. These facilities have been replaced by regional asset backed facilities established in Australia, New Zealand, USA, Canada and Europe.

This refinancing will reduce financing costs, while increasing flexibility and efficiency. As stated in our interim results presentation, interest costs are expected to fall to $20-25 million on an annualised basis, with interest costs for fiscal 2010 expected to be around $30-35 million.

Debt has also been significantly reduced over the past year, with gross debt of $526 million at 31 December 2009 compared with $1,518 million at 31 December 2008. Gross debt at June 2010 is expected to be down to around $400 million; a further 25% reduction in the current half year and around $1.1 billion lower than the 31 December 2008 level.

Commenting on the repayment, PaperlinX Chairman, Mr David Meiklejohn said “The Board is very pleased with the speed that PaperlinX has been able to undertake the refinancing programme, while at the same time making a substantial reduction to overall debt levels. The Company’s new lending profile provides a much better fit with our business as a focussed merchant. Repaying our historic lenders early has removed the expensive supervisory role played by them and their advisors that caused substantial, and sometimes unnecessary, distraction to the Board and management over the past 18 months.”

Commenting on the Group’s refinancing, PaperlinX Chief Executive Officer and Managing Director, Mr Tom Park, said, “This is a key step in rebuilding our financial position, which, along with our significant debt reduction and exit from manufacturing substantially reduces risk across the Group and provides us with a solid platform on which we can rebuild returns for our shareholders.”

“Repayment of our syndicated bank lenders and US Private Placement noteholders removes the need for their consent to payment of distributions and dividends to holders of PaperlinX Step-up Preference Securities and Ordinary Shares. Accordingly, the Board is giving consideration to the payment of some or all distributions including those which were not paid on the PaperlinX Step-up Preference Securities in 2009, taking account of all circumstances including the challenging market conditions we are continuing to see in our key European markets and alternate near term uses for cash”, added Mr Park.

“Trading conditions worldwide remain subdued and we continue to see weak earnings through the second half. Our focus remains on ensuring that we have an efficient and affordable cost base and level of working capital across all our businesses to generate adequate returns in the event of minimal demand improvement. Our success in achieving this also increases our leverage to the upside should we see improved paper demand or planned growth of our non-paper activities in the future.”

For further information, please contact:
Mr David Shirer
Executive General Manager Corporate Affairs
PaperlinX Limited
Ph: +61 3 8540 2302

The continued strength of the Australian dollar and the increase in the size and competitiveness of manufacturers elsewhere in the world is making it more difficult for Australian manufacturers in both domestic and export markets, according to the Australian Plantation Products and Paper Industry Council (AP3).

The Council outlines that the recent decision by PaperlinX to close its Wesley Vale pulp and paper mill and part of the Burnie facility is yet another confirmation of the major challenges facing Australian manufacturing.

Richard Stanton, CEO of A3P says, "The resources boom is providing huge benefits for the Australian economy as a whole and certain sectors and regions in particular. However, the boom is also having negative consequences for manufacturing and for those regions and communities that do not have large endowments of key natural resources."

He continues, "Australian pulp and paper manufacturers are competing against producers who receive a range of subsidies and benefits including free or cheap finance, generous renewable energy and fuel subsidies, and lower regulatory standards for environmental protection and employment conditions."

The Australian pulp and paper industry produces some $9bn of finished product each year including newsprint, packaging, printing, writing and industrial papers along with tissue and other sanitary products, according to the Council.

The A3P continues that the vast majority of these products are sold in the domestic market and in New Zealand, but these markets are increasingly being targeted by low cost producers in countries such as China and Indonesia. Australia must maintain a strong anti-dumping system to ensure Australian manufacturing is not unfairly disadvantaged, the Council states.

Also according to the A3p, the Australian pulp and paper industry does have a number of competitive advantages including;

* High quality, reasonably priced, sustainably managed fibre supply (wood and recovered paper);

* Competitively priced energy and an ability to increase renewable energy production from biomass;

* Skilled labour

* Stable business and regulatory environments

The council outlines that the pulp and paper manufacturing facilities require continuous large scale capital investment to remain competitive. Some $2bn has been invested in the industry in Australia in the past five years but even this investment is not enough to maintain the capacity of the industry and its ability to compete internationally.

Stanton also says, "The announcement by PaperlinX is sad news for the company's employees, contractors and suppliers and the communities concerned. These mills have made a substantial contribution to the Tasmanian and Australian economies over many decades."