Paperlinx extends trading halt to asess UK fallout
Paperlinx asks to extend the suspension of its shares on the Australian Stock Exchange, following a statement claiming they are still assessing the impact that the UK businesses going into administration will have on its international operations.
Wednesday, 08 Apr 2015 12:39 GMT
Paperlinx CEO Andrew Preece stressed that the group’s international operations would remain unaffected by the UK administration
An extended halt on trading until April 16th is being sought while an evaluation takes place, amid reports it is contemplating the sale of its Benelux arm in order to serve shareholders in other parts of Europe.
As a number of Paperlinx UK companies were placed into administration, a Paperlinx statement blamed ‘the continued lower demand for paper and decline in margins in the United Kingdom, together with the difficulty in restructuring substantial legacy pension liabilities’ as the factors that culminated in the insolvency of the firms.
Paperlinx CEO, Andy Preece, says in the statement: “The profitable Spicers businesses in Australia, New Zealand and Asia are insulated from the financial liabilities of the UK businesses. In this region, Paperlinx’s primary focus will be to continue to develop its businesses beyond paper merchanting and into sign & display and packaging.”
He continues: “The Paperlinx Board and management of Paperlinx deeply regret the impact the administration will have on UK employees and all stakeholders of the UK Group. This has been a difficult decision for the local directors of the UK Group, but one that I believe is unavoidable given the circumstances. Paperlinx has strongly supported its UK operations for many years, but despite continued efforts and the investment of significant capital over recent years, it has not been possible to successfully restructure the UK Group.” This announcement comes after Paperlinx UK's sign and display firm Robert Horne Group was one of the companies entered into administration, while the packaging firms were unaffected.
In this region, Paperlinx’s primary focus will be to continue to develop its businesses beyond paper merchanting and into sign & display and packaging”
Matt Smith, one of the two administrators appointed by Deloitte, adds: “The administration appointment specifically relates to Paperlinx UK’s paper and visual technology solutions businesses. The industry has faced an increasingly challenging environment due to falling demand as digital communications have increased. We are investigating how best to maximise value in the businesses for the benefit of its creditors.”
With 14 out of 19 UK branches closed and 693 members of staff now unemployed, one former employee has decided not to take the news lying down, and has set up a project on Crowdfunder with the goal of buying back the company from Deloitte and saving jobs. The project states that ‘talks are ongoing about the management structure if the pledge is funded’, and emphasises the commercial viability of investing by citing that Robert Horne made £1.2 million profit just three years ago.
Backers of the project have until April 22nd 2015 to reach the target of £500,000, which so far has reached £66,142 (13% of the total target), with one benefactor, under the name of strobe-investment, pledging £50,000, and the creator of the project, with the username paperlinx-employee, donating £10,150 to the cause.
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