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The Takeovers Panel has declined to conduct proceedings on an application from Coastal Capital International to prevent paper merchant Paperlinx from exercising any rights it acquires from its purchases of hybrid securities.
Coastal Capital International Ltd is a New York hedge fund that has 19 per cent of Paperlinx’s hybrid securities.
Paperlinx’s proposed hybrid buyout is an attempt to clear up its messy capital. The company wants to buy its hybrid securities and offer investors in the hybrids a majority equity stake in the company, and thereby restore confidence.
In a statement, The Takeovers Panel said that it declined to conduct proceedings, concluding that there was no reasonable prospect that it would make a declaration of unacceptable circumstances because the circumstances identified by Coastal Capital did not appear to be coercive to SPS holders.
In addition, the panel said that it is not clear why the documents that Coastal Capital seeks to be disclosed are required now, given the length of time the SPS Trust has been listed, and there does not appear to be anything expressly prohibiting PaperlinX making the bid, or warranting the Panel interfering with the bid. SPS holders are free to accept or reject the bid as they wish.
Paperlinx said in a statement that it is pleased with the decision because it will allow it to continue with the offer as planned.