PAPERLINX
$171m loss tip
Paper merchant PaperlinX expects to lose $171 million this year even after selling its Italian and US arms to stave off death by internet. The company said that it had reached an agreement for the $US76 million ($75.6 million) sale of its US operations, Spicers USA and Kelly Paper, to Central National-Gottesman Inc. It also announced EU competition authorities had cleared the way for the ?45 million ($55.9 million) sale of its Italian business to Lecta. The bulk of the proceeds half from the US sale and more than 70 per cent of the Italian deal will be used to pay off debts, transaction costs and fund redundancies.
APPOINTMENT
Meller to FSC
An AMP managing director has been appointed the Financial Services Council's deputy chairman. The board of the superannuation group last week unanimously elected AMP Financial Services' Craig Meller for the position. "In his over five years on the board, Craig has brought his extensive financial services industry experience to bear in the formation of industry policy and leadership," the chairman and head of Macquarie Bank's Banking and Financial Services Group, Peter Maher, said.
MERGER
Xstrata hurdle
Glencore International Plc and Xstrata Plc will probably change the terms of a planned merger before shareholders vote on it July 12 after criticism of the takeover ratio and payments to managers, HSBC Holdings Plc said. Xstrata holders will vote on Glencore's offer of 2.8 of its own shares for each one of the Swiss thermal-coal exporter and on a retention bonus of as much as #172.8 million ($270 million) to keep 73 Xstrata executives at the merged company. A decision going against either proposal would block the deal. The payments created "specific problems", according to Andrew Keen, a London-based analyst at HSBC, and this should be separated from the merger vote.
GROWTH
Retail suffers
Small business sales increased in May, but retail continued to suffer the weakest growth of all sectors, new research shows. ANZ's monthly Small Business Sales Trends report shows small business sales were up 6.9 per cent in May from the same month last year and up 3.8 per cent from the start of the year. But the report shows retail small business sales fell short of gains experienced by non-retail, with 4 per cent growth since May last year, compared to 9.2 per cent in non-retail.
Frequently Asked Questions about this Article…
What loss did PaperlinX expect and why is it significant for investors?
PaperlinX expected a $171 million loss for the year even after selling key operations. For everyday investors, that signals major restructuring and financial strain in the paper merchant sector, and it shows why the company is selling assets to shore up its balance sheet.
Who bought PaperlinX’s US operations and how much was the deal worth?
PaperlinX reached an agreement to sell its US operations, Spicers USA and Kelly Paper, to Central National‑Gottesman Inc. for US$76 million (about $75.6 million). Investors should note this was a material disposal aimed at raising cash.
Was the sale of PaperlinX’s Italian business approved and who is the buyer?
Yes. EU competition authorities cleared the way for PaperlinX to sell its Italian business to Lecta for €45 million (about $55.9 million), according to the article.
How will PaperlinX use the proceeds from the US and Italian sales?
The company said the bulk of proceeds will be used to pay down debt, cover transaction costs and fund redundancies. Specifically, about half the US sale and more than 70% of the Italian sale proceeds were earmarked for those purposes.
Who was appointed deputy chairman of the Financial Services Council (FSC)?
Craig Meller, a managing director at AMP Financial Services, was unanimously elected deputy chairman of the Financial Services Council. The FSC chairman highlighted his more than five years of board experience and industry policy involvement.
What are the main issues around the proposed Glencore‑Xstrata merger that investors should watch?
Glencore and Xstrata planned a merger with a proposed exchange ratio of 2.8 Glencore shares for each Xstrata share and a retention bonus up to £172.8 million ($270 million) to keep 73 Xstrata executives. Criticism of the takeover ratio and the manager payments prompted comments that the terms may be changed before the shareholder vote.
Why did analysts raise concerns about the retention payments in the Glencore‑Xstrata deal?
An HSBC analyst said the retention payments created 'specific problems' and suggested they should be separated from the merger vote. For investors, this highlights governance and alignment concerns when large retention bonuses are tied to merger approvals.
What did ANZ’s Small Business Sales Trends report say about retail small business growth?
ANZ reported small business sales were up 6.9% in May year-on-year and 3.8% year-to-date, but retail small business growth lagged—about 4% since May last year versus 9.2% for non‑retail. Everyday investors tracking sector performance may see this as a warning that retail remains the weakest sector among small businesses.
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