Spicers, formerly Paperlinx has long been run for the benefit of it's board of directors & numerous layers of management. The losses in Europe should never have been tolerated for as long as they were. Millions of $'s in value were destroyed due to inertia - however, senior managers in Europe never missed a days wages regardless of the performance of their business unit. The same can't be said for the supplier mills right up until the day Paperlinx closed its doors. Some were taken for a pretty penny. In the end, European management had to be kicked out, Andy Preece the trigger-man.
Here is Australasia the business is up to it's same tricks. The recently appointed CEO DM clearly wants to shake things up, his only problem is he is surrounded by 'lifers', paper tragics who know nothing except paper merchandising.
The paper merchandising business is in a death spiral, which correlates closely to the diminishing number & size of commercial printers. Anyone involved in the printing industry understands this. Sure, it won't disappear entirely, but the importance of print diminishes by the day.
The half-year results will reveal the true depth of Spicers problems. The small diversified business will be fine, the core business is rooted. Yes, Spicers will indeed need to raise more capital to continue in business in its present form, paper barely pays the bills these days. However more capital will only keep the paper tragics in jobs for another 6 months, or year, or 18 months.
I agree imunro, a sale would be the cleanest way to realise value, and as you so rightly point out should be tied to the restructuring.
The tragics will be fine, with an average tenure of 20+ years they can happily trot off into retirement.
SRS Price at posting:
2.7¢ Sentiment: Hold Disclosure: Held
